The Commonwealth Bank of Australia will need to get out of its stake in a Chinese life insurance joint venture before its $4 billion Australia and New Zealand life insurance sale to
AIA Group can go ahead.
The banking giant said its deal to offload troubled CommInsure and New Zealand business Sovereign was “conditional upon transfer of CBA's equity interest” out of the joint venture, according to a Fairfax article.
The transaction does not include CBA's general insurance arm and the CommInsure brand will be maintained.
CBA outgoing head of wealth management Annabel Spring said the timing of the AIA sale to complete in 2018 calendar year is “conditional” on the “transaction timing to exit the Chinese joint venture.”
“We're being conservative, but we are actively engaged in the process as you can imagine with a series of strategic options underway,” Spring told Fairfax.
CBA's decade-long joint venture with China Life CMG was renamed BoCommLife Insurance Company – this was after BoCom took over China Life CMG's 51% ownership in the joint venture.
At the time, CBA was reportedly buoyant about the deal. Simon Blair, former CBA group executive for international financial services, told Fairfax that there were plans to “grow the business nationally” through BoCom's “enormous distribution network.”
However, Fairfax said, the excitement about the joint venture now appears to have dimmed, with CBA providing the organization no further detail about its business “options.”
AIA regional chief executive Bill Lisle said CBA has a “structure they are looking to review.”
“It's not appropriate for us to discuss what CBA are [doing]. Obviously CommInsure is part of that structure, through the process we are reasonably confident over the next three to six months, we'll close the deal,” he told Fairfax. “The JV they have is in the Chinese market and that comes with Chinese regulations and that was not part of the deal for Australia.”
CBA also reportedly issued a raft of announcements, including the impending departure of Spring, plans to potentially float its $219 billion asset manager Colonial First
State Global Asset Management and the sale of its life insurance business.
The AIA-CBA deal, which is characterised by a 20-year partnership where CBA would continue to collect income for selling AIA products, is akin to AIA “slipping into” CommInsure's shoes, Spring said.
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