September 21, 2017
The Commonwealth Bank (CBA) will sell its Australia and New Zealand life insurance businesses, CommInsure Life and Sovereign, to the AIA Group for $3.8 billion.
The deal will see the two parties enter into a 20-year bancassurance arrangement with the CBA in Australia and ASB in New Zealand, with CBA retaining the CommInsure brand.
CBA stated CommInsure Life and Sovereign customers would retain all the current benefits of their existing policies and would be still be able to access life insurance products through the Commonwealth Bank and life and health insurance products through ASB.
The sale had been flagged by CBA in early August (see: CBA Examining CommInsure Sale) and CBA Chief Executive, Ian Narev said the provision of life insurance to the bank’s customers remained part of the its core vision.
“We have said for some time that while distributing life insurance is a fundamental part of that strategy, we were open to different models for doing so,” Narev said.
“The combination of AIA’s leading insurance capability and scale and Commonwealth Bank’s broad distribution, and our complementary values and commitment to customer focus and innovation, mean that a partnership between us will create an even better experience for our customers, in a more efficient way for our shareholders,” he added.
As a result of the sale, CBA Group Executive Wealth Management, Annabel Spring will leave the bank in December. Spring will continue to lead the Wealth Management businesses and its divestiture until the end of this year.
Spring will be replaced by Michael Venter, currently the Chief Financial Officer of International Financial Services, and formerly Group Deputy Chief Financial Officer and Chief Financial Officer of the Wealth Management division.
After the completion of the acquisition, which is expected during 2018 and subject to regulatory and government approvals, AIA will become the number one ranked life insurance provider in Australia and New Zealand.