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Credit Union Australia (CUA) has sold its health insurance arm and 40,000 policies to Perth-based private health insurance company HBF for an unspecified sale price, the Australian Financial Review (AFR) reported.
CUA, soon to rebrand as Great Southern Bank, plans to invest the sale’s proceeds to strengthen its core banking business and aid clients on their home ownership journey.
Paul Lewis, chief executive of CUA, said the cash injection would be allocated to the company’s objectives in mortgages and fledgling SME operation.
“We are the largest of the mutual banks,” he told AFR. “We are more likely to use this, not for regulatory capital, but to build out our capacity and core banking capability.”
Despite recording impressive numbers in December 2020 and January 2021, the current battle between home lenders has seen CUA’s home loans under management slip to $13.4 billion in the first half – a fall of 1.5%.
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CUA has been the leading health insurance provider in Australia for 40 years, but it has only operated on a for-profit basis in the last few years. Following the deal, most of CUA Health’s 79,000 members should expect to benefit from lower premiums and better benefits under HBF. CUA employees working under their health insurance arm will also be offered roles by HBF in Brisbane.
Lewis also said that CUA would need to get to 100,000 policies to reach the scale of operation needed to generate a decent return.
HBF’s purchase of CUA Health could strengthen its foothold outside West Australia while keeping CUA as an exclusive distribution partner for its policies. HBF’s acquisition of CUA’s health arm is expected to close by the third quarter of FY2021.
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