There has been speculation over the past week that Wesfarmers and Swiss global insurer Zurich Insurance Group are at an advanced stage of selling, according to The Australian Financial Review.
The Financial Review speculated last week that the deal was to include the entire Wesfarmers Insurance, but this has since been dismissed by reports from insurancenews.com.au, which state that Lumley will be the most likely target of acquisition in the deal. Wesfarmers Insurance has appointed Macquarie Capital and Gresham Advisory Partners, while Zurich is working with Goldman Sachs on the deal.
Wesfarmers Insurance is highly diversified, including WFI, Coles’ insurance operations, major broker OAMPS and New Zealand broker Crombie Lockwood, and the sale is generally agreed to be mutually beneficial to both companies, according to The Financial Review. Lumley is currently in sixth place in the market with Zurich, sitting at fifth place.
The deal does not appear to include Wesfarmers’ broking assets, although Wesfarmers would be unlikely to want to keep them in the medium term and informed sources have said that leaks to The Financial Review are being used to fuel market interest to put Wesfarmers’ distribution business – including OAMPS and Crombie Lockwood – on the market, according to insurancenews.com.au:
“It’s a sellers’ market at present,” one source said. “There would be strong competition among some leading brands for a shot at buying OAMPS, and the Crombie Lockwood arm is an exceptional business.
“But the speculation over a $2-3 billion deal is hard to believe.”
Mid-market business OAMPS is said to be likely to attract bidders, including Steadfast and rival group Austbrokers. Global brokers Arthur J Gallagher, Marsh and Aon are also said to be likely participants, should there be any assets action, according to insurancenews.com.au.
However, Wesfarmers Insurance Managing Director Anthony Gianotti told insurancenews.com.au back in August that Wesfarmers had no plans to sell any parts of the insurance business. Both Zurich and Wesfarmers have declined to comment on media speculation.