Commonwealth Bank (CBA) has agreed to sell its Australian general insurance business to Hollard in a deal involving an upfront payment of $625 million.

The transaction includes a 15-year alliance with Hollard for the distribution of home and motor vehicle products to CBA retail customers in Australia, with the insurer expected to make additional investments during the period “to drive innovation and enhance the customer experience”.

CBA said in 2018 that its CommInsure business, which has more than 800,000 policies, was under a strategic review leading to speculation that it would be purchased by an existing major player in the local market.

Hollard serves more than 1.2 million customers, has 800 employees and offers products including motor, home, contents, pet and commercial insurance. It expects to generate $1.6 billion of gross written premium in the 2021 financial year.

“The synergies between CBA and Hollard extend well beyond strategy and market segmentation,” Hollard Holdings Australia MD Richard Enthoven said today.

“We have a shared vision for the future of home insurance, the potential for better customer outcomes and an exciting role for digital innovation along our entire value chain.”

Completion of the transaction, subject to Australian Prudential Regulation Authority approval, is expected in the middle of next year.

More details in our regular bulletin this afternoon.