Sale of CBA Insurance Shareholding

Sale of CBA Insurance Shareholding Kevin Sceats Chairperson of the NZCB Board FROM NZCB —

CBA Insurance was established in 2002 based on a 50/50 shareholding between BuiltIn NZ and New Zealand Certified Builders (NZCB) (formerly Certified Builders Association of New Zealand, CBANZ) to offer insurance services to members of CBANZ.

We sold down 30% of the NZCB shareholding to BuiltIn NZ in 2007, which left us with a 20% shareholding, giving us little ability to influence business outcomes. Introducing our own Halo guarantee insurance in 2016, with the same Lloyd’s underwriter, was in direct competition with BuiltIn NZ’s offering and further aggravated the relationship between shareholders. The resultant reduction in returns on the funds that NZCB had invested, combined with a significant investment uncertainty, created an untenable position for both shareholders. Accordingly, the decision was made by the Board at the end of 2018 to negotiate a sale of our 20% shareholding in CBA Insurance to BuiltIn NZ.

Negotiations were subsequently undertaken between the BuiltIn NZ independent director and myself as NZCB Board Chairperson to establish a fair valuation of the business and thus the value of our shareholding. The resultant final settlement in late 2019 was a significant capital gain on NZCB’s original investment. This has been used to pay down debt related to our head office development, which will improve the strength of our balance sheet. Details of the transaction remain confidential between the parties, but suffice to say that on your behalf, we are now looking forward to engaging in more productive ventures.

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