Commonwealth Bank of Australia and AIA Group have reworked on their September 2017 deal pertaining to the sale of CommInsure Life, the former’s Australian life insurance business
Commonwealth Bank of Australia (CBA) has accepted a reduced price of A$2.375m (£1.31bn) for the sale of its Australian life insurance business (CommInsure Life) to Hong-Kong based AIA Group.
The two parties signed a deal in September 2017, under which CBA agreed to divest 100% of CommInsure Life and also its New Zealand life insurance business Sovereign in New Zealand to the pan-Asian life insurance group for a total of A$3.8bn (£2.1bn).
The sale of Sovereign was wrapped up in July 2018, yielding proceeds of A$1.27bn (£700m) to CBA. However, the closing of the sale of CommInsure Life has been delayed owing to prolonged regulatory approval processes, which otherwise was expected to occur in 2018.
As per the revised agreements signed, the Australian bank has accepted a reduction of A$150m (£82.96m) from the original sale price of CommInsure Life.
CBA CEO Matt Comyn said: “Today’s announcement provides CommInsure Life’s policyholders and staff with more clarity about the future of the business and progresses the simplification of CBA’s portfolio of businesses.
“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”.
CBA has also agreed to give AIA an option to extend the respective Australian and New Zealand distribution agreements by another five years to 25 years.
The Australian bank said that it remains committed to close the sale of its 37.5% stake in Chinese insurance company BoComm Life Insurance to Mitsui Sumitomo Insurance’s subsidiary MS&AD Insurance Group for about A$668m (£369.45m). The deal, which was signed in May 2018, is being pursued by CBA to satisfy a condition to the sale of CommInsure Life and Sovereign to AIA.
The closing of the BoCommLife transaction continues to be subject to regulatory approval from the China Banking and Insurance Regulatory Commission (CBIRC). CBA said that the revised agreements it signed with AIA regarding CommInsure Life does not impact the sale process of BoCommLife.