CUNA Mutual to Sell Its Australia Operation
After a 41 year run, CUNA Mutual Group is pulling its operations out of Australia through a sale to an international insurance firm based down under.
CUNA Mutual Group said it has reached an agreement in principle to sell its Australian business operations to QBE Insurance Group. QBE Australia is a member of the QBE Insurance Group, Australia's largest international insurance and reinsurance group and one of the top 25 global insurers and reinsurers as measured by gross written premium, according to CUNA Mutual. QBE Australia has more than 50 offices spanning each state and territory in Australia.
As part of its strategic review process, CUNA Mutual said it concluded its Australian business would be better positioned to serve its customers and for future growth under a different ownership structure. The company has had business operations in Australia since 1969, serving approximately 100 credit union and similar financial cooperative customers.
Part of the decision behind the sale had to do with CUNA Mutual acknowledging that it was having a difficult time building a motor and home insurance product base in Australia, said Faye Patzner, senior vice president, CUNA Mutual's head of international operations and the company's chief legal officer.
"It's not a product we were good at there," Patzner said. "Right now, in the United States, we partner with Liberty Mutual. We're not sure we were providing a service when there were other better players in the [motor and home] marketplace."
Patzner said another motive for selling its operations in Australia was because of the decline in credit unions in the country over the past 10 to 15 years. According to WOCCU, there were 111 credit unions with a combined $42 million in assets and more than 3.4 million members in Australia as of 2009.
About a year ago, Patzner said CUNA Mutual started looking at "others who could do it better" in Australia and began discussions with QBE last summer. Both companies have signed the contracts and the closing is scheduled for March 31. On closing day, QBE will own CUNA Mutual's life insurance plans and motor and home plans will renew through the firm. Almost all of the 84 employees will be offered employment with QBE, Patzner said.
"Our Australian operation is strong and well-positioned for growth under QBE to leverage QBE's core strengths in the property casualty market and existing presence in the Australian market," Patzner said.
CUNA Mutual's international operations in Europe and the Caribbean will not be affected by the Australian operation acquisition, according to the company.
"The European and Caribbean businesses provide CUNA Mutual a source of diversification at a time when our core U.S. credit union market is facing industry and economic pressure," Patzner said.
Over the past few years, CUNA Mutual has engaged in a number of transactions. Last year, the company partnered with Esurance, a direct-to-consumer car insurance company with more than 500,000 policyholders. In 2010, it also entered into an agreement with institutional investors to issue $85 million in fixed-rate, 20-year surplus notes to support its credit union market and diversification strategies in an effort to drive more growth.
In 2009, it established a business development unit that completed the purchase of CPI Qualified Plan Consultants, a 401(k) provider. That same year, it also acquired ProAg, a crop insurer it first partnered with in 2007. In the retirement services area CUNA Mutual has said there are more opportunities to acquire books of business and fold them into its current business model.
Patzner said CUNA Mutual is constantly looking at opportunities and making adjustments with its 100-plus product portfolio including possibly exploring more acquisitions.