Suncorp Group (ASX: SUN) to sell New Zealand life insurance business, shares soar on Thursday

April 04, 2024 06:02 PM AEDT | By Team Kalkine Media

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Suncorp Group (ASX: SUN) to sell New Zealand life insurance business, shares soar on Thursday — Image source: © Trottmannmarlon | Megapixl.com

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Australian insurer Suncorp Group (ASX: SUN) announced on Thursday that it would divest its New Zealand life insurance business to Resolution Life for NZ$410 million ($246.53 million), propelling its shares to a more than 16-year high.

Suncorp's shares, which had already surged by over 18% this year by the last trading session, climbed by as much as 0.18% to A$16.38 apiece, reaching their highest level since December 2007. Meanwhile, the broader market S&P/ASX 200 XJO was up 0.45%.

Management commentary

Suncorp CEO Steve Johnston expressed, "The transaction continues the reshaping of the Suncorp Group, and positions both the general and life insurance businesses for ongoing growth and success."

While the New Zealand general insurance arm will remain part of the Suncorp Group, the decision to sell its life insurance unit, Asteron Life, was well received by analysts at UBS. They deemed the divestment strategically attractive, allowing Suncorp to focus on its more lucrative general insurance operations.

Opinion of analysts

Analysts at UBS noted that the timing of the deal is favorable, given the prevailing trend of premium rate hardening across various lines of the general insurance business.

The transaction is subject to regulatory approvals and is anticipated to be completed within nine months, according to Suncorp.

The sale of its New Zealand life insurance business represents a significant move for Suncorp, aligning with its strategic objectives and garnering positive investor sentiment as evidenced by the surge in its share price. Investors and industry observers will be monitoring the progress of the deal closely as it moves through the regulatory approval process.

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