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.
Wow!
An ever shrinking Life Insurer base is not the answer to competition / consumer affordability.
hmmm… 3 major electricity generators controlling generation.
Watch this space.
There you go, proves my point that I made many years ago that banks should never have been involved in the life insurance business. I’m sure I wasn’t the only person to have that view but unfortunately not many people in the industry made it strongly enough.
What a disaster it has proved to be and now we are seeing the results, so many adversely affected and the banks finally retreating and getting back to their core business.
Less competition you say…well why not…that’s good for the consumer. Just ask anyone grappling with that electric bill.and less choice with Power companies, or Telco’s Just ask anyone that has less choice for health insurance, banks, supermarket, petrol stations….I wonder what the Australian Competition Consumer Commission has to say. You know that crowd we taxpayers fund….I think they are the ACCC. In Europe and the US, companies like Microsoft, Google, Facebook etc who have monopolies are taken to task by regulators who actually, believe it or not, regulate. Serious fines to like 16 Billion Euro against Apple was the last one. Competition and healthy competition is good for the consumer and yet our country lead by fools in Cantberra are just letting the consumer cop this in the neck. We are paying these fools in Cantberra for stupidity and they are trying to tell our industry about best interest. What a joke and a sick one at that.
hold on … all i have heard for last thousand years is banks this banks that … get out of insurance, cba have and sold to an insurance company and you are still moaning ? Don’t get it..
What an amazing result. As an adviser for 20+ years, I’ve been devastated to the changes of our industry. My licensee has let me down (yes, I belong to one that is own by an manufacturer starting with A ) over recent years. They have changed to a business focussed on self interest and not adviser delivery across service / product. Great to see AIA continually take the lead plus they have a great team, both new and old. Well done Damien and Pina.
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