It will sell the stake to its JV partner, the Royal Automobile Club of Tasmania (RACT). Credit: Gerd Altmann from Pixabay

Australian insurer Suncorp has agreed to divest its 50% joint venture (JV) stake in RACT Insurance (RACTI) in a cash deal worth $83.75m.

It will sell the stake to its JV partner, the Royal Automobile Club of Tasmania (RACT). The move aligns with the firm’s portfolio simplification plan.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

RACTI is an independent entity, having a standalone leadership team.

A 50:50 JV between Suncorp and the RACT, RACTI offers home and motor insurance products in Tasmania.

RACTI underwrote $112.5m of home as well as motor gross written premium as of 31 March 2021.

Suncorp expects the pre-tax profit on sale to be between $65m and $70m, along with nearly $50m anticipated in total capital release, including the profit on sale.

The deal, which awaits regulatory nod, is slated to close late in the 2021 calendar year.

Suncorp Group CEO Steve Johnston said: “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.

“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.”

The company also said that it has placed its reinsurance programme for 2022.

The main catastrophe programme’s structure is unchanged from FY21, with an upper limit of $6.5bn for home, motor, and commercial property portfolios in Australia and New Zealand.

Notably, last year, Suncorp decided to stop insuring and financing the oil and gas industry by 2025.

The firm expects to end all direct investments in the oil and gas sector by 2040 as part of its efforts for a ‘net-zero emissions economy’.