The head of a multinational bank has deflected claims that its life insurance business will be a hard sell despite a number of other domestic entities looking to exit the capital-intensive life sector.
The Commonwealth Bank of Australia (CBA) confirmed on Wednesday that it was in talks with unnamed third parties about the potential sale of CommInsure and its NZ life insurance business Sovereign. Other options for the businesses include retaining them, or initiating a reinsurance arrangement.
CBA chief executive Ian Narev said the "outcome of these discussions are still uncertain" and said the life businesses were attractive to buyers, while refusing to divulge how much the businesses might be worth, Australian Financial Review reported.
"What's become apparent is that there is some appetite in the broader insurance world in having discussions with us and [they] are very interested in the business. What we do know is that there are people who have a view that it is a very, very good business and have a very high level of interest," Narev said, adding: "We'll see if minds will meet on it.”
Narev denied that the decision to review the future of its life insurance arm has got anything to do with the insurance scandal that broke out last year, of which it was later cleared by the corporate watchdog, the report said.
"There has been a bunch of very long term strategic planning... This has got nothing to do with that, and nothing to do with any changes in capital areas... It is core to our vision to be able to provide life insurance to our customers but if we can find a better way of doing it we are open to it – but [it has] nothing to do with those events," the CBA boss said.
CBA announced Monday its full-year results for the year ended 2017 where it posted a 1% drop in its insurance income compared to the previous year. It also reported a 9.5% increase in claims due to Cyclone Debbie, with Comminsure retail life declining 12.7%. The business saw a 1% increase in average in-force premiums, however, AFR said.
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