Finance Finance News Wesfarmers sells insurance broking arm for $1 billion

Wesfarmers sells insurance broking arm for $1 billion

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Wesfarmers expects to reap a profit of up to $335 million from the $1.01 billion sale of its insurance broking arm.

The Australian conglomerate, best known for its ownership of retail outlets including Coles and Bunnings, is selling its OAMPS businesses in Australia and the UK and Crombie Lockwood in New Zealand.

The buyer is Illinois-based and New York Stock Exchange-listed Arthur J. Gallagher & Co, one of the world’s largest risk management and insurance broking companies, which employs over 16,000 people in 25 countries.

Wesfarmers says it will also receive a distribution of around $150 million, in addition to the purchase price, in order to repay funding of the premium funding operations.

Should the transaction be successfully completed, Wesfarmers says it expects to book a profit of between $310 to $335 million before tax.

However, the sale will need to be approved by Australia’s Foreign Investment Review Board, as well as regulatory bodies in New Zealand and the UK.

Wesfarmers says it could take several months to clear the regulatory hurdles.

The sale of the insurance broking business follows Wesfarmers’ sale of its insurance division to Insurance Australia Group, which was announced in December last year.

If all regulatory approvals are received and the transactions go ahead, then Wesfarmers will exit the insurance field altogether, booking an expected total profit of between $1.01-$1.085 billion before tax, on sale proceeds of around $3 billion.