Hollard hits the jackpot The insurer’s game-changing CommInsure acquisition is set to take it to new heights By John Deex
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peculation over which of Australia’s heavyweight insurers would land the much sought-after prize of Commonwealth Bank’s (CBA’s) general insurance operations was rife for weeks before the successful company was announced. Not surprisingly IAG and Allianz were rumoured to be front-runners as the process neared its conclusion. But the eventual winner was a company few had seen as a likely option. Hollard emerged victorious on June 21, announcing a deal that involves an upfront payment of $625 million and includes a 15-year partnership for the distribution of home and motor vehicle products to CBA retail customers in Australia. Not so long ago Hollard was considered a challenger brand, so it’s not hard to see why founder Richard Enthoven and his new Chief Executive Paul Fahey could barely contain their delight when the deal was announced. The acquisition brings Hollard an extra $800 million in gross written premium (GWP) – increasing its GWP by 50% – and a lot more besides. Mr Enthoven, who has stepped away from the chief executive role to become Managing Director of holding company Hollard Holdings Australia, says the acquisition aligns perfectly with ambitions the company has held from day one. While the CBA deal is undoubtedly a far bigger fish than he could have originally expected to land, he can look back on a range of achievements since he moved to Australia in 1999 to set up the local operations of the South African-headquartered Hollard. “We felt there was an opportunity for a partnership-based insurer in the market,” he tells Insurance News. “We knew that it would take a lot of time to deliver that. “But as it turned out the opportunity was probably bigger than we had anticipated. And I think it’s safe to say that we have exceeded our expectations by some margin.” He says Hollard’s strategy “is about working with significant organisations to distribute highly valued insurance products to their customer bases”. “And if that’s your strategy, a partnership with CBA
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would be your number one strategic objective. “So we are super-excited about the 15-year strategic alliance with CBA. It really allows us to double down on our strategy of focusing on our key customers.” This strategy includes partnerships with giant retailer Woolworths, financial services specialist Greenstone, and leading broker groups Steadfast and Austbrokers among others. “For a partnership-based insurer, [the CBA business] is the biggest prize in the country,” Mr Enthoven tells Insurance News. The acquisition should close in a year’s time, by which time Hollard expects to be “just shy” of $3 billion GWP. Mr Enthoven says that will make Hollard clearly the fifth-largest insurer in Australia, and probably the fourth-largest in personal lines. “So our ambition of becoming really meaningful in the Australian market, I think we have achieved.” But the acquisition delivers longer-term opportunities, too. Mr Fahey tells Insurance News he has his eye on what the acquired business can bring to Hollard, not just next year but over the next 15 years. Mr Fahey spent seven years running CBA’s general insurance operations before joining Hollard in 2016, so he’s perfectly placed to know where the extra opportunities in this deal lie. He says that over the course of the past few months working with the CBA team, he and Mr Enthoven “have both come to the realisation that there is still a lot of unrealised opportunity, given the access to Australians that [CBA] has”. “It takes us to far more meaningful scale than where we are today. But actually, that’s not the endgame. That is another five to 10 years down the road.” The CBA products will still be CBA-branded, but Hollard will underwrite them and provide support to improve aspects including claims experience and product innovation. And while CBA currently only supplies home and motor insurance, the Hollard team is already turning to what could come next. “All of us are looking at the fact that there are other
Australian ambition: Richard Enthoven set out to build a ‘partnership-based’ insurer
