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Australia-based Suncorp has agreed to sell Suncorp Portfolio Services, its wealth business, to LGIAsuper. Fitch Ratings said that it will not affect the ratings of the business, which Suncorp started in February last year.
Steve Johnston, the group chief executive, believes that the sale will help to streamline Suncorp's business.
“When I was appointed CEO, I said I wanted to align everyone at Suncorp around improving the way we deliver for our insurance and banking customers," Johnston said. “This approach is already delivering results, and the wealth sale will allow the bank team to focus exclusively on the priorities we outlined at the interim result in February.”
LGIAsuper is based in Queensland, as is the acquired business.
“After extensive engagement with a number of potential acquirers, we believe that LGIAsuper is best placed to deliver sustainable member outcomes,” Suncorp Banking & Wealth chief executive Clive van Horen said.
Fitch Ratings said the sale by Suncorp of the business was neutral to it’s A+/Stable ratings. “Fitch does not expect any material change in SGL's financial profile and core non-life insurance and banking businesses as a result of the sale,” the agency said.
“Fitch views the transaction to be credit neutral to the ratings because the wealth business's contribution to group earnings has been very small, and is not a significant driver of overall revenue or profitability,” it said.
The wealth business recorded a loss of A$6 million ($4.65 million) in the 2020 financial year versus a profit of A$1 million a year before, against the group's A$871 million profit from ongoing operations.
“We believe the sale would allow management to focus on the group's core insurance and banking businesses,” Fitch added.