DIVERSIFIED conglomerate Wesfarmers is selling its Australasian insurance underwriting operations to Insurance Australia Group (IAG) for about $1.85 billion - its biggest ever divestment. Wesfarmers managing director Richard Goyder said the sale followed approaches by a number of parties that were interested in the underwriting business. Wesfarmers had spent a lot of money in recent years getting the Australian and New Zealand insurance underwriting business into much better shape. "But it hasn't delivered satisfactory returns on average over the last five years to Wesfarmers," Mr Goyder told reporters. And over a period of time, if any of our businesses don't generate satisfactory returns, we'll look and see what we do with it. Mr Goyder said the sale of the insurance underwriting business also reduced some of the risk in Wesfarmers' portfolio of industrial, mining, retail and financial businesses. There was inherent volatility in the insurance business because of catastrophic events like earthquakes in New Zealand, and Cyclone Yasi. Mr Goyder said Wesfarmers had not yet decided what to do with the proceeds from the sale. The integration of Wesfarmers' underwriting businesses is expected to generate pre-tax net benefits of about $140 million a year, with a significant proportion derived from reinsurance. Shares in Wesfarmers were 20.5 cents higher at $41.51 at 1515 AEDT. IAG shares are in a trading halt until the start of trading on Wednesday, December 18.