Sovereign's parent company, the Commonwealth Bank of Australia (CBA), has today announced that it has agreed to sell its life insurance businesses in New Zealand (Sovereign) and Australia (CommInsure) to AIA Group Limited ("AIA") for AUD $3.8 billion.
The sale increases AIA's position as one of the biggest life insurers in the Asia-Pacific region.
The sale of CommInsure and Sovereign, which CBA flagged in August while announcing a A$9.9b annual profit, includes a 20-year deal for CBA to distribute AIA life insurance products in Australia and New Zealand.
Commonwealth chief executive Ian Narev said the lender remained committed to providing high quality products.
Separately, CBA said it was considering a possible initial public offering (IPO) of its asset management business Colonial First State Global Asset Management. 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.
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AIA has reached an agreement with the Commonwealth Bank of Australia (CBA) to acquire Sovereign and CommInsure Life, pending regulatory approval.
CBA's wealth management group executive, Annabel Spring, will oversee the divestment and strategic review until she leaves the bank in December.
CommInsure was hit by controversy in 2016 when its managers were accused of pressuring doctors to alter medical opinions so it could deny claims.
Commenting on the transaction, AIA Group chief executive and president Ng Keng Hooi said it will "strengthen AIA's protection market leadership and expand our distribution capabilities in these markets". "We look forward to welcoming our new customers and colleagues and to working together with CBA and ASB on our shared objective of increasing life insurance penetration across the banks' 13 million customers in Australia and New Zealand".
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