August 9, 2017
The Commonwealth Bank (CBA) has flagged that it may sell its Australian and New Zealand life insurance businesses stating that it is in discussions with interested parties.
The statement was made as part of the bank’s annual results, which were released to the ASX early this morning, in which the bank indicated it was “…in discussions with third parties in relation to their potential interest in our life insurance businesses in Australia and New Zealand. The outcome of those discussions is uncertain.”
“While the discussions may lead to the divestment of those businesses, we will also consider a full range of alternatives, including retaining the businesses, reinsurance arrangements or other strategic options,” CBA stated.
CBA added that CommInsure and Sovereign (the NZ life insurance business) were strong businesses with scale, expertise, competitive products and access to attractive distribution channels and it remain committed to provided life insurance products to its customers.
According to the bank’s financial statements insurance income fell from $795 million for the 2015/16 financial year to $786 million for the 2016/17 financial year as inforce premiums remained relatively unchanged at $2.465 billion.
CommInsure’s income decreased from $502 million last financial year to $438 million this year while the New Zealand life business increased income from $242 million to $272 million across the same period.
CBA stated the 1% decrease in income was due to “…higher claims resulting in loss recognition of $143 million, $78 million higher than the prior year” which took place within the CommInsure business.
CBA is the second large financial services provider to recently flag a possible sale of its life insurance business with Suncorp also indicating it may sell Asteron Life on completion of a review of that business (see: Suncorp Considers Asteron Life Options).