The insurance company has entered into a multimillion-dollar share sale agreement that will see it dispose of all its shares in brokerage Savill Hicks Corp Pty Ltd to former directors Stefan Hicks and Brett Graves.
Following on from the May 2018 announcement that it would adopt a “new strategic direction” and seek to “dispose of its Australian retail brokerage businesses”, the board of Ensurance Limited (ENA) has now entered into a share sale agreement signed to dispose of 100 per cent of the issued capital in Savill Hicks Corp Pty Ltd (SHC).
The $4.1 million agreement comprises $2.2 million in cash, the buyback of 30,140,905 fully paid ordinary shares in ENA, assumption of SHC employee entitlements by the purchaser and the cancellation of convertible notes held by related parties of Stefan Hicks.
Both Mr Hicks (Ensurance’s former managing director) and Mr Graves (the former CEO of Ensurance Now) left ENA earlier this year. Mr Hicks founded Savill Hicks & Associates in 1990, which later folded into Parker Resources before becoming part of ENA. Mr Graves is the CEO of SHC.
The sale, which is subject to a number of conditions precedent including shareholder approval, will result in the full divestment of the company’s Australian retail brokerage arm, which includes the entire insurance broking business, assets and management team.
The transaction is expected to complete within two months.
In a statement to the ASX, the company called the agreement a “significant milestone”, with the sale “freeing up management’s time to solely focus on activities in support of the company’s repositioning”.
Cash funds received from the disposal of the retail brokerage business will reportedly be used to expand the company’s UK and Australia-based operations, hire “additional underwriting personnel to meet customer demand for its specialised construction-related insurance and to drive sales and marketing activity”.
Tony Leibowitz, chairman of Ensurance, commented: “This agreement is a significant milestone for Ensurance, and a pleasing result for the team after months of negotiation.
“The disposal of our retail brokerage business delivers a wonderful result for the company and our shareholders, returning capital that we can now invest in pursuing our recently announced strategy.”
The brokerage company will be renamed InsureNOW "in the next quarter" under Mr Hicks and Mr Graves' leadership. They will both head up the business in a joint CEO capacity, with Mr Hicks operating from London and managing insurer relations while Mr Graves will manage the Australian operations.
According to the joint CEOs, there will be no structural changes to the insurance portal and all staff will stay in their current positions.
“We’re thrilled to buy our DNA back and embrace our newfound autonomy. The acquisition will enable the business to be more nimble, responsive and more proactively to align with market demands,” said Mr Hicks.
“We’re delighted to now be in the position to be able to solely focus on extending our reach within the broking sector, which has been our goal from the outset. The acquisition now gives us multiple levels of autonomy that will continue to enhance our offering and user experience,” added Mr Graves.
Mr Graves continued: "Despite the market being more open to reviewing their insurance, it’s alarming that still around 81% of home owners and renters are exposed to significant financial loss due to being underinsured. A broker is therefore in the perfect position to ensure their client is properly covered at the time of settlement, or when the property is being refinanced.
"It’s also interesting to note the shift in consumer’s attitudes to be progressively savvier about the options available. Consequently, consumers are very cost sensitive, expect choice and are far more open to alternative providers. Time sensitivity is a continual challenge, and it seems that consumers are actively seeking advice they can trust – particularly from brokers,” he said.
“In general, cross-selling insurance is a natural progression of the home loan process that provides an opportunity to extend your service offering, grow your business and create ‘sticker’ relationships. It’s also a fantastic opportunity for brokers to reinforce to their clients that they’re committed to their well-being and that they’re not exposed at an increasingly sensitive time,” Mr Graves concluded.
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