Commonwealth Bank has entered into further agreements to progress the planned divestment of its CommInsure Life business to AIA Group.
The bank notes its planned divestment has been subject to ongoing regulatory approval processes, which has led to an extended period of uncertainty for CommInsure.
A release issued at the end of last week noted the revised transaction path comprises a joint co-operation agreement, reinsurance arrangements, partnership milestone payments and a statutory asset transfer. The aggregate proceeds for CBA from the transaction are expected to be $2,375m which represents a reduction of $150m from the original sale price.
These arrangements are expected to be implemented in a staged manner throughout 2020 financial year.
CBA and its New Zealand-based ASB Bank have also agreed to grant AIA Group an option to extend the respective Australian and New Zealand distribution agreements from 20 years to 25 years.
CBA CEO, Matt Comyn commented: “Today’s announcement provides CommInsure Life’s policyholders and staff with more clarity about the future of the business.
Details of the revised transaction path include CBA and AIA Group enterring into a joint co-operation agreement which will result in the full economic interests associated with CommInsure Life (excluding in relation to the Group’s 37.5% equity interest in BoCommLife Insurance Company Limited (BoCommLife) being transferred to AIA and AIA obtaining an appropriate level of direct management and oversight of the business. AIA Australia & New Zealand CEO Damien Mu will lead CommInsure Life under these arrangements.
Addressing the sale of its equity interest in China’s BoCommLife, the release stated that CBA remains committed to completing the sale of its 37.5% equity interest in BoCommLife to MS&AD Insurance Group Holdings: “Completion of the sale of the BoCommLife equity interest remains subject to regulatory approval from the China Banking and Insurance Regulatory Commission (CBIRC) and CBA is working constructively with CBIRC in relation to the process.”
CBA added, “For the avoidance of doubt, the revised transaction path in relation to CommInsure Life does not impact this sale process and CBA will continue to exercise full control over the BoCommLife equity interest until its sale has been completed.”
