by Susan Edmunds
It was reported this month that AIA will buy the Commonwealth Bank’s insurance businesses on both sides of the Tasman.
Regulatory approval is still required.
Industry rumours are that Sovereign chief executive Nick Stanhope will remain as chief executive across both businesses.
Stanhope referred a query on to a spokesman, who said the company would not comment on speculation.
“The transaction is going to take some time to complete and remains subject to various conditions, including regulatory approvals in both New Zealand, Australia and China,” he said.
“In the meantime Sovereign and AIA will work through the best way to bring the teams together and organise themselves for success. When it is appropriate to do so an operational update will be provided."
Scott Black, chief executive of the Share group, said it would be business as usual for the insurer for now.
He said he understood Stanhope was looking to AIA for replacement administration technology.
“It would be sensible to migrate both Sovereign and AIA policies to the new system – and rationalise the product range to a ‘best of the best’ scenario.
“In the meantime there may be some limited commission rationalisation and possibly some product price rationalisation so that there is not two competing offers in the market from the same company.
"The biggest danger is that over the next couple of the years as they work through the merger that they become too internally focussed and drop the ball with the advisers. That will just give bad advisers additional justification to churn business away from both companies to an alternative carrier – although with the ever reducing options in the market that becomes more difficult.”
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