Wesfarmers' A$1 billion insurance sale to NYSE-listed Gallagher gets regulator clearances
By Suze Metherell
June 12 (BusinessDesk) - Wesfarmers has been given the green light by regulators to sell its broking and premium funding units for A$1 billion to Arthur J. Gallagher & Co, the New York stock exchange-listed insurer, completing the Australian company’s exit from the insurance industry.
The Perth-based company expects to make a pretax profit of between A$310 million and A$335 million from the transaction after approvals from the Overseas Investment Office, Foreign Investment Review Board in Australia and the UK's Financial Conduct Authority.
Wesfarmers will get a further A$150 million distribution to repay premium funding as part of the sale, which includes its Crombie Lockwood, Lumley Finance and Monument Premium Funding brands in New Zealand.
Illinois-based AJG is also acquiring Wesfarmers’ OAMPS Insurance Brokers in Australia, the country’s largest insurance broker, and OAMPS UK.
The sale will complete Wesfarmers’ divestment of its insurance division. It sold its Australian and New Zealand underwriting businesses, WFI and Lumley Insurance, last year for A$1.85 billion to Insurance Australia Group, which operates the State, NZI and AMI brands and is New Zealand’s largest general insurer.
Last month, the IAG deal was approved by New Zealand antitrust regulators as well as the Australia Competition and Consumer Commission and is now awaiting signoff from the Australian Prudential Regulation Authority and Federal Treasurer.
Wesfarmers said it will have sold A$3 billion of insurance assets for a total pretax profit of between A$1.01 billion and A$1.09 billion. Its brokerage operations generated A$331.1 million in revenue in the year ended June 30, 2013, of which between 40 and 45 percent was derived from its New Zealand operations.
AJG operates in 26 countries and is one of the world’s largest risk management and insurance broking companies, according to its website.