Suncorp has sold its Capital Smart business to AMA Group as the rise of more sophisticated automotive technologies drives changes in the crash repair and parts procurement sector.

The insurer expects an after-tax profit of about $275-$295 million on the deal, which values Capital Smart at $420 million.

Suncorp will retain a 10% interest in Capital Smart, the second-largest smash repair business in Australia, and will have a seat on the board. It has also entered into a 15-year motor services partnership agreement with two five-year options to extend.

“The divestment means Suncorp can focus on its core insurance and banking operations,” CEO Steve Johnston said.

“Importantly, the agreement maintains Suncorp’s competitive advantage and we look forward to working closely with AMA as an ongoing partner.”

AMA is rapidly expanding its vehicle repairs business, completing 21 acquisitions and opening four new sites in the past financial year.

Suncorp Insurance CEO Gary Dransfield says AMA has been the largest preferred partner in its repairer network, focusing on severely damaged cars that are not drivable, while Smart takes its name from the small and medium accident repairs that are its specialty.

“Cars are crashing less but when they do have a collision the nature of the damage is more complex,” he told insuranceNEWS.com.au. “We think a partner like AMA that is across the full spectrum of repairs is well placed to manage and deal with that.”

Suncorp also sold its ACM Parts recycling business to AMA for $20 million, broadly in line with book value.

The company expects the transactions will be completed by the end of the month. It will later update investors on plans for the sale proceeds.