Marac sells half its insurance business to AA
Marac, a subsidiary of listed financial services company Pyne Gould Corp., agreed to sell half of its insurance business to the Automobile Association to establish a new joint venture.
Thursday, March 25th 2010, 11:53AM
by BusinessDesk
The sale, which will see AA buy 50% of Marac Insurance for $2.2 million, comes after Marac Finance set up a finance partnership with the national motoring organisation last year, and will follow a similar vein with AA outlets able to sell Marac Insurance's car, life and asset protection products. The venture will be launched on April 1, and the introduction of the new products and services will be staggered.
The joint venture "gives us the ability to tap into AA's substantial distribution network and membership base" of more than a million people, said Pyne Gould chief executive Jeff Greenslade, in a statement.
"This gives us a bank-like distribution network and fits with our strategy to become a niche bank."
Last year Marac capitalised on the exit of rivals in the auto-finance market by entering into finance arrangements with AA, Hyundai Motors and Suzuki NZ, which also included insurance. In October 2008 GE Capital and GMAC exited from car-lending in New Zealand.
Pyne Gould reiterated its net profit forecast of $20.9 million for the six months ending June 30. Shares in Pyne Gould rose 2.1% to 48 cents and are unchanged in the year to date. AA chief executive Brian Gibbons said the deal would allow them to offer broader services to its members.
"We believe there will be strong demand for them, and it's our goal to develop additional products and services in the future," he said in a statement.
The deal is subject to a five-year exclusivity agreement, and will have no impact on AA Insurance, which is another joint venture between the motoring group and Queensland-based Suncorp-Metway, which provides a different range of products.
AA Insurance head of strategy, pricing and corporate affairs Suzanne Wolton, said the arrangement will give AA members "a broader range of products".
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