Wesfarmers mulls insurance sale

Wesfarmers (WES) is reportedly in advanced stages of negotiating a sale of its $2 billion insurance business to Swiss firm Zurich Insurance Group, according to The Australian Financial Review.

Negotiations are reportedly at a point where Zurich has begun conducting due diligence.

The deal would merge two insurance businesses that rank fifth and sixth, respectively, in Australia. With both companies struggling to match up against the top four players — QBE Insurance Group, Insurance Australia Group, Suncorp and Allianz — a merger would give Zurich a boost in efforts to join the top tier of insurance providers in Australia.

There had been speculation that Wesfarmers was seeking ways to grow its insurance business, as the company had been trumpeting its insurance unit's growth.

However, fund managers had cast doubt on the prospect of a Wesfarmers push to fund a run at the top four industry players, the AFR added.