Business mortgage

Latitude abandons its insurance business – Mortgage Business

The non-banking group announced that it would sell its insurance business, Hallmark, which would inject $20 million into its core business.

Latitude Group (Latitude) has reached an agreement to sell its insurance subsidiary Latitude Insurance Holdings (Hallmark) to St Andrew Insurance Group (St Andrews) for $20.3 million.

The sale will allow Latitude to “free up approximately $90 million in its core business”, simplify its business model, reduce costs and streamline technology, and maximize returns for shareholders.

Although completion of the transaction is subject to regulatory approval by APRA and RBNZ, it is expected to close in late 2022 or early 2023.

The group is expected to record an after-tax loss of around $30 million on the sale, including impairment of goodwill and other intangible assets.

The sale comes months after Latitude broke its $250 million deal on Humm’s buy now pay later (BNPL) consumer finance business.

The agreement reportedly paid total consideration of 150 million Latitude shares and $35 million in cash in exchange for BNPL’s transactions, installments and hummgroup’s credit cards, but he was dropped in June, with both lenders citing the “current major financial market disruption” as the catalyst for the cancellation.

The decision came a day after Humm released its business update for the financial year, which saw its net profit after tax fell 61 percent in the fiscal year to date through May.

Commenting on the group’s latest decision to sell Hallmark, Latitude Managing Director and CEO Ahmed Fahour said the move will allow Latitude to “fully focus” on its core business, Payout and Payments. consumer loans (Money) while simplifying its operations.

“Most importantly, it ensures that Hallmark customers will be managed by a dedicated insurance company that will meet ongoing obligations to policyholders,” Fahour said.

Meanwhile, St Andrew’s CEO Matthew Way said the insurer was “attracted” to Hallmark because of its “solid business” and talented team.

Mr Way said the move will help build scale and further expand the group’s footprint across Australia.

“In addition to ensuring a seamless transition for Hallmark employees, our number one priority will be to ensure that we continue to provide the same high level of service to Hallmark and St Andrew’s customers,” said Mr. Way.

Hallmark made an immaterial contribution to Latitude’s cash NPAT earnings in the first half of 2022, after being largely closed to new business during the COVID era of FY2020 and FY21.

[Related: Latitude Humm call of HCF acquisition]

Latitude abandons its insurance business

mortgage

Last update: August 08, 2022

Posted: August 09, 2022