Bank of Queensland (BOQ) has entered into an agreement to sell its St Andrew's Insurance business to Farmcove Investment Holdings for $23 million.
The bank said the sale is consistent with its refreshed strategy announced in February this year to deliver more simplified benefits and aligned focus on its five core strategic pillars.
BOQ chief executive George Frazis said the sale of St Andrew's represents an important strategic milestone for the bank.
"We are delighted to have secured a buyer that has a long term vision for the business which includes meeting the continued obligations of policyholders," Frazis said.
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"The divestment enables us to focus on our niche customer segments while simplifying out business model."
Farmcove managing director Matt Lancaster said the company is looking at its purchase of St Andrew's with a "long horizon" mindset.
"St Andrew's has insured more than 600,000 Australians over its two decade history and we look forward to seeing the company deliver simple and cost effective insurance solutions for more Australians over the coming decades as an independent, Australian owned competitor in the insurance marketplace," Lancaster said.
BOQ said the transaction is expected to result in an indicative post-tax statutory loss on sale of around $27 million to $30 million.
The bank said the contribution from St Andrew's to its net profit in FY20 has been immaterial after it made the decision to largely close the business after the February announcement.
The transaction is expected to be completed by the end of FY21, and is subject to regulatory approvals.
BOQ will provide a capped indemnity to Farmcove for certain pre-completion matters, the bank said.
In addition, a vendor load has been agreed between both parties which will come into effect once the transaction is complete.