Commonwealth Bank of Australia (CBA) has agreed to sell its Australian general insurance business to South African insurer Hollard Group.

The Australian banking group said that it will sell CommInsure General Insurance for an upfront cash consideration of $468m (A$625m), plus deferred payments.

The divested business currently has over 800,000 policies in place.

Concurrently, the companies also entered into 15-year distribution partnership.

The partnership will allow the South African group to distribute home and motor vehicle insurance products to CBA’s retail customers in Australia.

Commenting on the deal, CBA CEO Matt Comyn said: “The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences.

“CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers.”

The divestment of the insurance unit is expected to boost CBA’s Common Equity Tier 1 capital by approximately A$400m.

In-addition, CBA will continue to earn income on the distribution of home and motor insurance products.

Hollard Holdings Australia Managing Director Richard Enthoven said: “The synergies between CBA and Hollard extend well beyond strategy and market segmentation.

“We have a shared vision for the future of home insurance, the potential for better customer outcomes, and an exciting role for digital innovation along our entire value chain.”

The deal, subject to regulatory approval, is expected to be completed by mid-2022.

Earlier this month, Hollard Insurance led the funding round of Australian insurtech Expense Check Cover.