Australian Unity splits insurance and bonds

Australian Unityhas restructured its life insurance operations, including its bond products, and has spun two divisions out into a new company called Australian Unity Investment Bonds (AUIB).

AUIB will be wholly owned by Australian Unity, however, liabilities for these products will now be covered by the new company.

Australian Unity group managing director Ian Ferres says the move was designed to clean up the corporate structure of the parent company.

“Australian Unity will have no operating businesses in future, it will be the controlling company for all the subsidiaries,” he says.

“It will mean our bond business will become corporatised and we are transferring $6 million to AUIB — which is more than adequate capital for liabilities.”

The products being transferred to the new company include Australian Unity’s capital guaranteed bond, funeral bond and education bond. Currently, there is about $450 million of funds under management in the bonds.

The internal management structure of the bonds will stay the same and Australian Unity Funds Management will still handle the investment side of the business.

Ferres says the move will not affect bond-holders’ rights and they will still be members of Australian Unity.

New bond customers will also become members of Australian Unity.

The proposal is being put to the members at a special meeting this week and, according to Ferres, the proxies suggest there will be overwhelming support for the move.