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Sovereign sold

The Commonwealth Bank of Australia has confirmed it has sold its insurance business in Australia and New Zealand for A$3.8 billion - the sale include Sovereign.

Thursday, September 21st 2017, 10:32AM 8 Comments

The sale, to AIA, includes a 20-year deal for CBA to distribute AIA life insurance products in New Zealand and Australia, it has been reported.

The deal is subject to regulatory approvals but is expected to be completed next year.

Sovereign and ASB customers will retain the current benefits of their existing policies.

“This transaction represents the next exciting stage in Sovereign’s evolution. We are the product of several mergers and acquisitions of our own – so the prospect of becoming part of the AIA family, as our industry continues to consolidate globally, is an exciting prospect," said chief executive Nick Stanhope.

“We remain dedicated to providing our customers with the best products and service and we are confident that this will be a great fit for our customers, distribution partners, and our people."

AIA group chief executive Ng Keng Hooi, said the partnership would expand AIA's access to potential new customers and enable it to engage with them in a new way through CBA and ASB's retail bank networks.

"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.”

AIA said it would make it the leading life insurer in Australia and New Zealand.

Australia and New Zealand chief executive Damien Mu said: “The scale and nature of the agreements with CBA and ASB represent an enormous step forward for AIA in the pursuit of our purpose to make a difference in people’s lives, and will significantly transform and expand our market-leading presence in Australia and New Zealand.

“By partnering with CBA and ASB, we can bring together the expertise of each organisation to further improve our offering to help champion Australia and New Zealand to be the healthiest and most protected nations in the world. This is an excellent outcome for all customers that we help not only through financial protection, but also by improving their health and wellbeing.”

He said AIA had a history of building trusted, engaging and enduring partnerships with leading financial institutions in the region.

"We look forward to welcoming our new team members from CommInsure and Sovereign in due course, and to building a successful partnership with CBA and ASB. We remain absolutely committed to our existing partners, and will be focused on ensuring that we continue to deliver the best possible outcomes for them and their customers.”

AIA regional chief executive Bill Lisle said: “AIA Group is deeply committed to Australia and New Zealand and we are excited about our future in both markets, particularly in light of the highly attractive agreement we have announced today. We have a high performing and very experienced team in Australia and New Zealand, which is part of AIA Group, one of the largest and strongest life insurance companies in the world. We look forward to ensuring that the acquisition and bancassurance partnerships we have agreed to with CBA and ASB generate very positive and enduring benefits for our customers in both markets and indeed all of our stakeholders.”

AIA Australia chair Theresa Gattung said it was an exciting opportunity to strengthen its position in the market.

The deal is subject to regulatory approvals but is expected to be completed next year.

Tags: AIA ASB Life insurance Sovereign

« Zurich, AIA make play for SovereignClients complain about advisers »

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Comments from our readers

On 21 September 2017 at 10:57 am Barry Read said:
So that leaves Asteron and Onepath on the block. Interesting times. Will Fidelity, AMP or Partners look to expand?
On 21 September 2017 at 11:42 am dcwhyte said:
I guess I wasa few years too early with my recommendation!!
On 21 September 2017 at 12:23 pm Murray Weatherston said:
While we should probably never give the bi little Scotsman a chance to gloat, David what exactly was your recommendation?
Second does anyone want to guess the split in the price between NZ and Australia?
On 21 September 2017 at 1:32 pm Mr Slater said:
Murray I hope it wasn't a case of 'buy one get one free'?
On 21 September 2017 at 2:33 pm Pragmatic said:
Large financial institutions are divesting themselves of wealth management capabilities presenting threats and opportunities for the industry
On 21 September 2017 at 3:06 pm Comprehensive Planner said:
It looks like AIA may have now joined the Big End Of Town. Hopefully that isn't a negative thing and they continue to act small.
On 21 September 2017 at 3:20 pm Murray Weatherston said:
@Mr Slater
I don't think so. An Aussie story I saw said the price was 16.9 times 2017-18 pro forma earnings.
That story said the price was 1.1 times embedded value, but a different story said CBA had to write $300 million off carrying value.
On 21 September 2017 at 8:34 pm dcwhyte said:
@Murray - I recommended to AIA Senior Management in 1999 that they buy Sovereign. Got nowhere at all. Different times, different players, different outcome. Having been involved with both Companies, I hope all works out well. We live in interesting times!

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