Advisers welcome Sovereign sale news

Advisers are optimistic about the future for Sovereign, which will be bought by AIA.

Friday, September 22nd 2017, 6:00AM

by Susan Edmunds

It was revealed yesterday that Commonwealth Bank had sold its insurance businesses in Australia and New Zealand to AIA for A$3.8 billion ($4.1b).

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."

Jon-Paul Hale, adviser and owner of Willowgrove Consulting, said it would create opportunities in the market. "It's disappointing to see a brand disappear but I think it's going to create a much better position for AIA in the New Zealand market."

Ron Flood, of Ron Flood and Associates, agreed. "Other than having one less company to place business with it shouldn't have too much impact."

He said consumers could end up getting the best of what each had to offer "It will be interesting to see who else goes," he said.

Reagan Bax, adviser at NZ Advice Group and PAA board member, said he had a lot of clients with Sovereign policies.

How well the change was navigated would depend on the communication from the insurer, and advisers, about what was happening, he said.

"There's no need to panic as such. There'll probably be a name change but other than that, it's not really a huge deal. Going forward it should be more positive than anything, with more product on offer."

The strength of a big international company such as AIA could help the market, he said.

Bax said it would be important that Nick Stanhope remained as chief executive to continue existing relationships.

Sovereign's processes had been better and more efficient than AIA's in the past, he said, so it would be positive if AIA adopted Sovereign's, rather than the other way around.

"It will probably be a good thing in the long run."

Newpark managing director Darren Gannon said Sovereign had transformed the adviser market from tied to independent.

"Customers and advisers like choice of product and supplier so losing a dominate provider in the market isn’t great. Well done to AIA and their strength and expertise will be welcomed in NZ and I hope they continue to concentrate and support advisers ahead of the bank distribution channel and bring something new and exciting to the market to keep it energised and exciting for all."

Tags: AIA ASB Darren Gannon financial advisers Newpark PAA Sovereign