Wesfarmers to sell insurance underwriting unit to IAG
SYDNEY Dec 16 (Reuters) - Australia's Wesfarmers Ltd has agreed to sell its insurance underwriting businesses to Insurance Australia Group Ltd for A$1.85 billion ($1.66 billion), the two companies said on Monday.
Wesfarmers, a coal-to-retail conglomerate, said in a statement that the sale was consistent with its focus on disciplined portfolio management.
Media reported in late October that Zurich Insurance was in advanced talks to buy Wesfarmers' insurance business and had started due diligence.
The sale includes commercial lines of Wesfarmers' insurance underwriting operations, the Lumley and WFI brands, and a growing personal lines business sold through the Coles Insurance affinity partnership, the company said. The Coles part would continue with Coles Supermarkets with a remaining 10-year term.
The sale does not include Wesfarmers' insurance broking operations and its premium funding businesses, the company added.
The acquisition would be funded from a combination of ordinary equity, subordinated debt and internal funds, which included a fully underwritten A$1.2 billion institutional placement at A$5.47 per share.
IAG shares were put on a trading halt on Monday morning, after closing at A$5.70 on Friday, while Wesfarmers edged up 0.1 percent against a 0.2 percent slip in the broader market.
($1 = 1.1166 Australian dollars) (Reporting by Maggie Lu Yueyang; Editing by Stephen Coates)