By Eric Johnston
Suncorp Metway has resisted selling its stake in a specialist truck insurer it operates jointly with Insurance Australia Group, as part of a settlement in a long-running legal battle between the arch rivals.
The two insurers have been locked in a bitter dispute over the ownership of the National Transport Insurance venture, which is the nation's largest provider of truck insurance.
Since 2007 IAG has been attempting to acquire the 50 per cent stake in National Transport Insurance it does not own, but which it had claimed it was entitled to under the terms of the venture.
National Transport Insurance, which writes more than $170 million in premiums annually, was established eight years ago as a venture by the commercial insurance arms of IAG and Promina.
The parties had a change of control option which gave either the right to acquire the whole business in the event that one of the shareholders was acquired.
Following Suncorp's $7.9 billion acquisition of Promina, IAG has been attempting to acquire the full business but the two had not been able to agree on pricing.
The long-running dispute between the two insurers had previously been likened to the disagreement to the dispute between Patrick Corp and Toll Holdings over Pacific National, which almost crippled the jointly-owned rail freight business years ago.
But the two insurers today said the venture would continue with no changes to National Transport Insurance’s ownership structure.
‘‘The terms of the agreement, enabling the longstanding partnership ... to continue in a manner that makes commercial sense to both parties,’’ IAG said in a statement.
As a result of the agreement, which remains confidential, IAG said it had stopped its legal proceedings.
Still, it said the terms of the agreement, ‘‘strengthen the existing joint venture ... in a manner that makes commercial sense’’.
Suncorp last week warned its annual net profit would fall by a third as a result of bad debts in the banking business, huge weather-related insurance claims and volatile financial markets.
In a warning that confirmed market watchers' expectations of a second successive year of bad results, the Brisbane-based financial services combine yesterday disclosed that its after-tax earnings for the year to June 30 would fall to between $340 million and $360 million, compared with last year's $556 million net profit.