Australian life insurer Suncorp-Metway has booked a A$40 million ($53.4 million) loss on the sale of its New Zealand Guardian Trust business.
The ASX-listed company yesterday said it had reached a conditional agreement to sell Guardian Trust to Australian trustee company the Trust Company for A$42 million.
Suncorp said while
the disposal proceeds were above the net tangible assets associated with the company it would make an after tax loss on the sale due to a write-off of goodwill.
Guardian Trust has come under fire from investors for the suspension and wind-down of its mortgage fund.
Guardian Trust suspended withdrawals from its $249 million mortgage fund in July 2008 amid a run on mortgage funds in the wake of the global financial crisis. Last year investors voted to wind it down.
Guardian Trust was also the trustee for troubled Hanover Finance which froze $554 million owed to 16,500 investors in 2008. Hanover has since sold its assets to Allied Farmers. Suncorp Life New Zealand managing director Sean Carroll said the goodwill write-down was not related to either event but was simply a revaluation since it bought the business in 2007. "The purchase price is one Suncorp is happy with."
Suncorp had decided to sell Guardian Trust because it did not fit with its core life insurance business.
"We have had a strategy for a number of years now to be a life specialist."
It also recently sold fund manager Tyndall Investment Management to Japanese asset management firm Nikko.
Carroll said there were no plans to sell its stakes in Asteron or AA Life which also operates in New Zealand.
Guardian Trust managing director John Botica said there would be little change for its New Zealand clients as the Trust Company planned to keep the same brand, staffing levels and management.
"It's really good news for Guardian Trust as we will benefit from having a like-minded parent."
Both Guardian and the Trust Company had strong balance sheets and were keen to grow its New Zealand and Australian businesses, he said.
"We will be pursuing solid aspirations as opposed to spectacular growth," Botica said.
The acquisition will increase the Trust Company's funds under supervision from A$118 billion to A$163 billion. The transaction is subject to approval from the Overseas Investment Office.
