In major news on Australian stocks, Suncorp Group (AU:SUN) shares surged to record levels after the company revealed its intention to sell Asteron Life Limited, its New Zealand life insurance business, to Resolution Life. The transaction is a part of Suncorp’s ongoing portfolio restructuring efforts to focus on the general insurance business in New Zealand. Suncorp shares reached a high point of AU$16.60 during early trading, marking their highest level in over 16 years.
However, SUN shares lost momentum during the second half of trading hours and were down 0.12% as of writing. Year-to-date, SUN stock has gained almost 19%.
Suncorp Group is a leading financial services firm that offers a wide range of insurance and banking solutions across Australia and New Zealand. Meanwhile, Resolution Life is a global life insurance group that specializes in acquiring and managing portfolios of life insurance policies.
Breaking Down the Details
The deal is valued at NZ$410 million (AU$375 million) and includes an initial payment of NZ$250 million, with the remaining amount payable 18 months thereafter. Depending on regulatory approvals, the transaction is anticipated to be completed within the next nine months.
Suncorp stated that its New Zealand general insurance business will remain unaffected and remain a part of the company. Additionally, the transaction will not alter the business operations of Asteron Life, which will continue operating under the same brand and management team.
UBS Analyst Bullish on Suncorp’s Sale
Following the announcement, UBS analyst Scott Russell confirmed his Buy rating on Suncorp stock, predicting a modest upside of over 2%. Russell believes Asteron Life was not a significant part of the group, which makes this divestment “strategically appealing.”
He also commends the timing of the deal, noting that the general insurance market is experiencing an upswing in premiums.
Is Suncorp a Good Stock to Buy Now?
As per the consensus among analysts on TipRanks, SUN stock has been assigned a Strong Buy rating based on eight Buy and two Hold recommendations. The Suncorp share price target is AU$16.23, which is 0.50% below the current trading levels.
