The Suncorp Group Limited (ASX: SUN) share price is on watch this morning after the company shared news it is selling its superannuation products. Suncorp Portfolio Services Limited, the company’s superannuation portfolio, will soon have a new home with LGIAsuper.
The Suncorp share price was swapping hands for $10.41 apiece at yesterday’s close.
Let’s take a closer look at today’s news from Suncorp.
Suncorp super sale
According to Suncorp’s release, the sale of Suncorp Portfolio Services Limited was proposed in the company’s recent strategic review.
Suncorp says the sale will simplify the company’s portfolio and expects it will have little impact on its profits.
LGIAsuper will pay an estimated $45 million for Suncorp’s super assets. That figure includes a fixed amount of $26.6 million, plus regulatory capital.
LGIAsuper is soon to merge with Energy Super. After the merger and the sale of Suncorp’s wealth business, the two Queensland-based businesses will have approximately $28 billion of super under administration and around 250,000 members.
The sale is expected to be completed in the 2022 financial year.
Suncorp’s CEO Steve Johnston said the sale of Suncorp’s wealth business was a good outcome for Suncorp’s 137,000 superannuation members. The company currently manages $6.4 billion of its members’ super. It was awarded the best performing balanced super investment fund for 2020.
As part of the sale agreement, Suncorp will continue to offer superannuation products to customers for 18 months after the assets are handed to LGIAsuper.
LGIAsuper will offer jobs to approximately 130 employees who are currently working directly or indirectly with the wealth business.
Suncorp expects to be saddled with around $14 million of annualised stranded costs from the sale until the end of the 2023 financial year. It expects this to be offset by traditional services fees.
Commentary from management
Johnston stated that his goal as CEO was to improve the way Suncorp delivered insurance and banking to its customers.
This approach is already delivering results, and the wealth sale will allow the bank team to focus exclusively on the priorities we outlined at the interim result in February.
Suncorp Banking & Wealth CEO Clive van Horen added:
After extensive engagement with a number of potential acquirers, we believe that LGIAsuper is best placed to deliver sustainable member outcomes.
The values and purpose of LGIAsuper, which is also headquartered in Queensland, align closely with those of Suncorp.
Suncorp share price snapshot
Today’s news puts the Suncorp share price front and centre as investors eye the reaction. Currently, Suncorp shares are up 5% year to date and have lifted 17% over the last 12 months.
The company has a market capitalisation of around $13.3 billion, with 1.2 billion shares outstanding.