AIA has reached an agreement with Commonwealth Bank of Australia (CBA) to acquire the bank’s life and health insurance business in Australia and New Zealand for $3.8bn.
AIA will take on CommInsure Life and Sovereign alongside a 20-year strategic bancassurance partnership with CBA in Australia and ASB Bank in New Zealand.
The deal, subject to regulatory approval, will see AIA become the number one ranked life insurance provider in both Australia and New Zealand in a “highly complementary” fit alongside AIA’s existing business in the region.
“This transaction provides a highly-attractive opportunity to transform AIA's businesses in Australia and New Zealand by extending our protection market leadership positions and expanding our distribution capabilities through strategic long-term partnerships with leading retail banks in these markets,” Ng Keng Hooi, AIA’s group chief executive and president said.
“The transaction will generate substantial financial benefits for our shareholders through enabling us to deliver further profitable new business growth by leveraging AIA’s capabilities and leading product solutions.”
The $3.8bn fee is payable in cash on completion of the transaction and subject to adjustments at completion. Taking into account proceeds from reinsurance agreements, and the free surplus within Comminsure Life and Sovereign, the final net cash outlay by AIA is expected to be $1.8bn.
The deal is expected to be completed during 2018.
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