The Queensland-based bank announced in a statement that there were two components to the sale: the first, a “$35 million quota reinsurance arrangement between the life insurance subsidiary of St Andrew’s and a major global reinsurer,” with the remaining $30 million paid by Freedom for the acquisition of St Andrew’s share capital.
BOQ will also enter into a three-year distribution arrangement (with an option of two additional years) with Freedom in order to provide life insurance products to BOQ’s clients.
The sale is expected to reach completion mid-2018 and provide a post-tax gain of $8 million and raise BOQ’s Common Equity Tier ratio by 0.2 per cent.
St Andrew’s comprised $8 million of BOQ’s after-tax profits last financial year, according to the statement.
Commenting on the transaction, BOQ managing director and chief executive Jon Sutton said: “St Andrew’s has made a strong contribution to the BOQ Group since its acquisition in 2010, but industry and business dynamics have changed dramatically in recent years.
“These changing conditions now mean St Andrew’s is a better long-term strategic fit for Freedom.”
Freedom managing director and chief executive Keith Cohen added that St Andrew’s Insurance complemented Freedom’s growth strategy.
“Freedom is looking forward to working with Bank of Queensland and continuing to protect its customers, supported by its position as one of Australia’s most respected banks with a widely-recognised service culture,” Mr Cohen said.
Both the reinsurance transaction and the share purchase are pending regulatory approval.
BOQ's cash earnings after tax in the first half of FY18 was $182 million, rising 4 per cent from the same time last year, and its statutory net profit after tax increased by 8 per cent to $174 million.