01 Oct Insurer Suncorp to sell vehicle repair business for $420 million
Insurance company Suncorp Group has announced the sale of its vehicle repair business to smash repairs firm AMA Group for a fee of AUS$420 million.
Suncorp’s decision to sell Capital S.M.A.R.T is part of a strategy to streamline its operations and focus on its core insurance and banking businesses, after posting a steep drop in profit in its 2019 results.
The disappointing financial results are a result of higher hazard claims and rising regulatory costs, after a government-mandated inquiry found widespread misconduct in the financial sector.
From the vehicle repairs divestment, Suncorp said it expects an after-tax profit in the range of $275 million to A$295 million, in addition to the value of a 10% stake it will retain.
“The increasing complexity of repairs is driving significant change in the smash repair and parts procurement industry, and the divestment means Suncorp can focus on its core insurance and banking operations,” said recently appointed CEO Steve Johnston.
Suncorp also referred to a 25-year service agreement with Capital S.M.A.R.T, which includes two additional five-year renewal options, that will allow both Suncorp and AMA to continue reaping benefits from their existing partnership.