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Insignia offloads investment bond business

4 minute read

The firm said that the business is considered “adjacent” to its core strategic priorities.

Insignia Financial has entered into an agreement to offload its $1.1 billion friendly society investment bond business through the divestment of IOOF to Australian Unity.

The deal will see Insignia paid a total consideration of up to $40 million, including $36 million in cash upon completion as well as an additional amount of up to $4 million payable in 12 months following completion subject to the transition of clients and funds under management (FUM).

IOOF is a friendly society under the Life Insurance Act 1995 and provides a range of investment bonds including the WealthBuilder product suite. In a statement to the ASX on Monday, Insignia noted that IOOF had approximately $1.1 billion in FUM as of June 30.


“The investment bond business is considered adjacent to Insignia Financial’s core strategic priorities and the sale will provide improved business focus and clarity, while IOOF Ltd’s policyholders will benefit from joining the Australian Unity Group which is committed to growing and investing in the investment bond sector over the long term,” Insignia said.

In a separate statement to the ASX, Australian Unity said the deal was in line with its strategy priority to realise the “modern mutual” via the provision of innovative products and services which meet the health and financial wellbeing of its members and customers.

According to the firm, the acquisition will strengthen its position as a leader in investment bonds, growing to more than 180,000 customers and estimated FUM in excess of $3.2 billion.

Esther Kerr, the chief executive officer of wealth and capital markets at Australian Unity, explained that a key component of the firm’s strategic plan is to actively seek mutual mergers and acquisition opportunities which achieve value efficiencies from its current expertise and operations.

“People use investment bonds to prepare for a variety of key life events, such as education, housing, health and aged care, and estate planning, and we look forward to working with Insignia to ensure a smooth transition for IOOF policyholders,” Ms Kerr added.

Completion of the deal remains subject to the satisfaction of conditions precedent, including relevant regulatory approvals. Insignia noted it would provide a number of services to IOOF under a transitional services agreement for an initial period of 12 months.

The two firms will also enter into a strategic alliance agreement “to support the mutual aim of providing financial wellbeing to all Australians”.

Insignia confirmed that the proceeds from the sale would be used to reduce its net debt.

In April, Insignia reported that its funds under management and administration (FUMA) rose by 2.2 per cent to $291.3 billion during the third quarter of the financial year.

Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.