Suncorp is pushing ahead with plans to simplify its business portfolio, announcing last week it will sell its 50% stake in RACT Insurance for $83.75 million to mutual motoring body RACT Group.

The simplification program has seen the business dispose of non-core assets such as its life arm to TAL and most recently in May, its wealth unit to LGIASuper.

Under the terms of the binding sale agreement, Suncorp says it will receive the payment in upfront cash proceeds and that it expects to book a pre-tax profit of $65-70 million from the transaction in this financial year.

The deal is expected to complete later this year, subject to regulatory approvals including from the Australian Prudential Regulation Authority.

“Suncorp and RACT have enjoyed a successful relationship in Tasmania since 2007,” Suncorp Group CEO Steve Johnston said in an investor update last week. “We have mutually agreed that now is the right time for RACT to take full control of the insurance entity.

“This is consistent with our focus on simplifying the group and driving improvement in our core insurance and banking businesses.”

RACT Insurance CEO Trent Sayers says the mutual is looking forward to a new operating model that will lay the foundation for future growth.

“It’s the right time for RACT to make that further investment in what’s been a very high-performing business,” he told insuranceNEWS.com.au.

“We’ve been close to double-digit premium growth in the market and we continue to see optimism in terms of growth opportunities in the business.

“At the moment RACT Insurance is a standalone end-to-end insurance company in its own right, and we will be looking to reintegrate that back into the broader operating model of the RACT Group.”