On 21 September 2017, CBA announced it was selling life insurance businesses CommInsure and Sovereign to AIA Group for $3.8 billion.
The sale also involves a 20-year distribution agreement where CBA-owned New Zealand retail bank ASB Bank will provide AIA life and health insurance products to New Zealand customers.
In a statement released yesterday, the major bank said the first part of the transaction had been completed, with Sovereign sold to AIA for $1.275 billion.
The proceeds so far are expected to “result in a pro forma uplift to the Group’s Common Equity Tier 1 (“CET1”) ratio of 28 basis points on an APRA basis, based on 31 March 2018 risk weighted assets,” according to the statement.
CBA chief executive officer Matt Comyn said the sale of Sovereign was a “significant milestone” and a “key step” in the major bank’s strategy to simplify in order to focus on its “core banking franchise” in the two countries.
“Our partnership with AIA will allow our customers in New Zealand to have continued access to high quality life and health insurance products through ASB Bank,” Mr Comyn said.
AIA group chief executive and president Ng Keng Hooi added that the acquisition of Sovereign and the 20-year partnership would make AIA “the clear leader in the New Zealand life insurance market”.
“We look forward to welcoming the Sovereign team into AIA Group and providing innovative life insurance propositions that meet the growing protection needs of customers throughout the nation,” Mr Hooi said.
In a separate statement, AIA group regional chief executive Bill Lisle added that the long-term partnership was a "significant opportunity" for AIA New Zealand.
"We are confident that ASB’s distribution network, combined with AIA’s regional bancassurance capabilities and life insurance product expertise, will deliver strong insurance propositions for our customers.”
AIA Group and Sovereign will operate and sell products under their respective brands until the announcement of a long-term strategy.
The second part of the transaction, the sale of CommInsure, is pending regulatory approval and is expected to be completed in late 2018.