Conglomerate Wesfarmers (ASX: WES) has announced the appointment of Mr Anthony Gianotti as Managing Director (MD) of Wesfarmers Insurance. Mr Gianotti has been with the insurance division since 2007, having held the position of Finance Director from 2009 and most recently the position of Acting MD.
Although much smaller than the Coles division, which has over $34 billion in revenues, the insurance division is approaching $2 billion in revenue and is a significant business in its own right. The last couple of years reported earnings by Wesfarmers Insurance has been weak, this is partially explained by the exposure to the New Zealand earthquake, nevertheless shareholders will be hoping Mr Gianotti can boost returns and expand margins to more acceptable levels.
The Insurance division has the potential to greatly expand its customer base by cross selling insurance policies to customers of Wesfarmers many retailing divisions. Competitor Woolworths (ASX: WOW) is also looking to increase its penetration of insurance sales to its customers, but arguably Wesfarmers had the potential to do this more successfully.
Foolish takeaway
While Wesfarmers and Woolworths are in many ways mature businesses they still have a number of exciting growth options. Cross-selling opportunities such as insurance are relatively low risk but have the very real potential to boost shareholder value.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
