Source: Commonwealth Bank of Australia (CBA)
Friday, 23 August 2019 (SYDNEY): Commonwealth Bank of Australia (CBA) today announced that it has entered into further agreements to progress the planned divestment of its Australian life insurance business (CommInsure Life) to AIA Group Limited (AIA).
The planned divestment has been subject to ongoing regulatory approval processes, which has led to an extended period of uncertainty for CommInsure Life.
The revised transaction path comprises a joint co-operation agreement, reinsurance arrangements, partnership milestone payments and a statutory asset transfer. The aggregate proceeds for CBA from the transaction are expected to be $2,375m, a reduction of $150m from the original sale price. These arrangements are expected to be implemented in a staged manner throughout FY20, with CBA to receive approximately $750 million of proceeds and distributions by the end of 1H FY20 and the remaining $1,625 million by the end of FY20.
CBA and ASB have also agreed to grant AIA an option to extend the respective Australian and New Zealand distribution agreements from 20 years to 25 years.
CBA Chief Executive Officer Matt Comyn said: “Today’s announcement provides CommInsure Life’s policyholders and staff with more clarity about the future of the business and progresses the simplification of CBA’s portfolio of businesses.
“We are excited by the opportunity to bring together the strengths of AIA and CommInsure Life and are working hard with our partner to develop a new generation of products for CBA’s customers, which will deliver excellent customer outcomes”.
The revised transaction path is subject to a number of Australian regulatory approvals, the entry into reinsurance arrangements and life insurance entity board approvals.
 Subject to completion adjustments.