Analyst Note| Nathan Zaia |
Commonwealth Bank plans to sell its general insurance business to Hollard Group for AUD 625 million plus deferred payments if undisclosed milestones are achieved. We agree with the strategy of investing and focusing management attention on the part of the business, lending, which underpins the bank's wide economic moat rating. Potential consumer value-add from getting a loan and insurance in the one place is retained via a distribution agreement. The bank will enter a 15-year strategic alliance with Hollard to distribute home and motor vehicle insurance products.