Suncorp Group has completed the sale of its 50 per cent interest in RACT Insurance (RACTI) to its joint venture partner, the Royal Automobile Club of Tasmania (RACT).
Announcing its intent to divest itself of the motor and home insurance provider in July this year, Suncorp said the sale was consistent with the continued simplification of its portfolio, with CEO Steve Johnston saying the transaction was in the best interests of customers, shareholders and the business.
“Suncorp and RACT have enjoyed a successful relationship in Tasmania since 2007. We have mutually agreed that now is the right time for RACT to take full control of the insurance entity. This is consistent with our focus on simplifying the group and driving improvement in our core insurance and banking businesses,” Johnston said.
“Tasmania remains an important market for Suncorp Group. We are now focused on driving growth in the region through our wholly owned brands. This includes our leading national mass-market brand AAMI, as well as our more specialised brands Shannons and APIA.”
In July, Suncorp said the sale consideration of $83.75 million for RACTI will be in the form of upfront cash proceeds and reflects a price-to-earnings ratio of 18.1 times based on expected fiscal year 2021 earnings. The pre-tax profit on sale is expected to be in the range of $65 to $70 million. The total capital release, including the profit on sale, is expected to be approximately $50 million.