CommInsure Life is CBA’s Australian life insurance business and Colonial Mutual Life Assurance Society is its key life insurance entity
AIA Australia and Commonwealth Bank of Australia (CBA) have executed a joint cooperation agreement to provide an alternative completion structure for the former’s acquisition of CommInsure Life, The Colonial Mutual Life Assurance Society (CMLA) and some other affiliated companies.
CommInsure Life is the Australian life insurance business of CBA and Colonial Mutual Life Assurance Society is its key life insurance entity.
CBA said that it has been issued an upfront payment of A$500m ($345.35m) from AIA Australia as part of the transaction.
The Australian bank said that the full economic interests related to CommInsure Life, which excludes its 37.5% stake in BoCommLife Insurance, have been transferred to AIA Australia.
Furthermore, the 25-year distribution agreement between CBA and AIA in Australia, signed in August 2019, has also come into effect.
AIA Group regional chief executive Bill Lisle said: “We are delighted to welcome CommInsure Life to AIA, and to commence our 25-year partnership with CBA. Our partnership with CBA provides a unique opportunity to help people by addressing their financial, life and health needs, by bringing the best of both our organisations together to deliver truly differentiated, innovative propositions to the Australian marketplace.”
According to CBA, Colonial Mutual Life Assurance Society has also implemented reinsurance arrangements that are likely to result in a distribution to the former in 1H FY2020.
CBA CEO Matt Comyn said: “We are excited by the opportunity to bring together the strengths of AIA and CommInsure Life and are working hard with our partner to develop a new generation of products for CBA’s customers, which will deliver excellent customer outcomes.”
The Australian bank said that the implementation of the joint co-operation agreement with AIA Australia is a major first step in the revised A$2.375bn deal signed in August 2019 with the Hong-Kong based AIA Group pertaining to the sale of CommInsure Life.
CBA signed a deal about two years ago to sell 100% of CommInsure Life and also its New Zealand life insurance business Sovereign to AIA for a total of A$3.8bn ($2.62bn).
The sale of Sovereign was completed in July 2018, fetching CBA proceeds of A$1.27bn ($880m). However, the completion of the sale of CommInsure Life has been delayed due to prolonged regulatory approval processes, which otherwise was due to occur in 2018.
CBA’s update on the closing of the sale of CommInsure Life
CBA said that the steps towards the final closing of the share sale or statutory asset transfer of the Australian life insurance business continue to be progressed in accordance with previous announcements.