Australia's Northern Territory Sells General Insurance Operations for $368 Million

   By Ross Kelly 
 

SYDNEY--The government of Australia's Northern Territory sold its general insurance operations for 424 million Australian dollars (US$368 million), the latest privatization of a state-owned asset to raise funds for new infrastructure.

Germany's Allianz SE (ALV.XE) bought the insurance arm of Territory Insurance Office, while Adelaide-based People's Choice Credit Union bought its banking business, the government said.

Allianz has pledged to continue offering flood, storm surge and cyclone cover to farmers as part of the deal.

It comes a day after Australia's federal government raised A$5.68 billion from the sale of the country's top public health insurer, Medibank Private, beating expectations for the largest initial public offering of a government-owned asset here in nearly two decades.

Conservative governments across Australia have said they are keen to sell assets to raise funds for new infrastructure such as airports. State governments, including in New South Wales and Queensland, have sold billions of dollars worth of ports and toll road assets in recent months.

"I want to assure Territorians that this is not a decision we have taken lightly," Adam Giles, the Northern Territory's chief minister said in a statement. "But the government believes it is the best outcome for taxpayers because it reduces their exposure to risk and frees up A$424 million in funds for the development of Northern Australia."

Proceeds from the Territory Insurance Office privatization will mostly go into a long-term infrastructure development fund, the government said. The remainder will be available for flood mitigation work, including the removal of an ambulance centre in the town of Katherine out of a flood zone.

The Northern Territory government said it had also considered selling the motor accidents compensation arm of TIO, which would have raised the overall deal price to A$609 million, but decided to keep it in public hands.

Write to Ross Kelly at [e-mail]

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