The regional bank has today announced that it will not proceed with the sale of its insurance business to Freedom Insurance Group.
Bank of Queensland and Freedom today announced the mutual agreement terminate the St Andrews Insurance sale and purchase agreement.
Freedom has been pursuing equity funding for the purposes of the St Andrews acquisition, the process of which has included the provision of confidential due diligence to prospective third-party investors and negotiation of related transaction documentation.
In a statement this morning, BOQ said it became clear that the conditions of the transaction would not be satisfied within the time limits contained in the sale agreement.
“Following the termination of the agreement with Freedom, BOQ will continue to assess its strategic options in relation to St Andrew’s. In the meantime, St Andrew’s continues to be a strongly capitalised business that remains focused on delivering for its customers and corporate partners,” the bank said.
The troubled Freedom Insurance Group last week completed its strategic review, which was prompted by ASIC’s recommendations about the life insurance industry.
As part of the review, which was conducted in collaboration with Deloitte, the Freedom board identified that the company may face a liquidity shortfall during calendar year 2019 arising from the timing of payments of commission clawbacks in the absence of receipts of commissions from new business sales.
“In this regard, the company is considering alternate options to address the potential shortfall,” the group said in a trading update.
“In addition, Freedom is implementing initiatives to improve operational efficiency and reduce costs.”
Freedom expects to make a provision for net remediation costs in its financial accounts for the period ending 31 December 2018 of between approximately $3 million and $4 million.
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