Australian insurer Suncorp has agreed to divest its 50% joint venture (JV) stake in RACT Insurance (RACTI) in a cash deal worth $83.75m.

It will sell the stake to its JV partner, the Royal Automobile Club of Tasmania (RACT). The move aligns with the firm’s portfolio simplification plan.

RACTI is an independent entity, having a standalone leadership team.

A 50:50 JV between Suncorp and the RACT, RACTI offers home and motor insurance products in Tasmania.

RACTI underwrote $112.5m of home as well as motor gross written premium as of 31 March 2021.

Suncorp expects the pre-tax profit on sale to be between $65m and $70m, along with nearly $50m anticipated in total capital release, including the profit on sale.

The deal, which awaits regulatory nod, is slated to close late in the 2021 calendar year.

Suncorp Group CEO Steve Johnston said: “We have mutually agreed that now is the right time for RACT to take full control of the insurance entity.

“This is consistent with our focus on simplifying the Group and driving improvement in our core insurance and banking businesses.

“Tasmania remains an important market for Suncorp Group. We are now focused on driving growth in the region through our wholly owned brands. This includes our leading national mass market brand AAMI, as well as our more specialised brands Shannons and APIA.”

The company also said that it has placed its reinsurance programme for 2022.

The main catastrophe programme’s structure is unchanged from FY21, with an upper limit of $6.5bn for home, motor, and commercial property portfolios in Australia and New Zealand.

Notably, last year, Suncorp decided to stop insuring and financing the oil and gas industry by 2025.

The firm expects to end all direct investments in the oil and gas sector by 2040 as part of its efforts for a ‘net-zero emissions economy’.