Economy

Insurer Sovereign sold to Asia's AIA

Insurer Sovereign sold to Asia's AIA”

That will lift CBA's CET1 ratio by about 0.7 per cent to 10.8 per cent, above the 10.5 per cent benchmark the Australian Prudential Regulation Authority has instructed the big banks to reach by January 2020.

Sovereign's parent company, the Commonwealth Bank of Australia (CBA), has today announced that it has agreed to sell its life insurance businesses in New Zealand (Sovereign) and Australia (CommInsure) to AIA Group Limited ("AIA") for AUD $3.8 billion.

The deal is the largest acquisition by AIA, at almost double the size of the insurer's 2012 purchase of a Malaysian asset held by ING Groep NV, according to data compiled by Bloomberg. The aggregate gross embedded value of CommInsure Life and Sovereign was AU$3.531 billion as at June 30 2017.

Australia and New Zealand chief executive Damien Mu said: "The scale and nature of the agreements with CBA and ASB represent an enormous step forward for AIA in the pursuit of our goal to make a difference in people's lives, and will significantly transform and expand our market-leading presence in Australia and New Zealand". We are the product of several mergers and acquisitions of our own - so the prospect of becoming part of the AIA family, as our industry continues to consolidate globally, is an exciting prospect. "We remain absolutely committed to our existing partners, and will be focused on ensuring that we continue to deliver the best possible outcomes for them and their customers".

CBA CEO, Ian Narev, says: "Providing our customers with access to high quality products and services for all their financial needs is core to our vision of securing and enhancing financial wellbeing". AIA was also among shortlisted bidders for Australia & New Zealand Banking Group Ltd.'s wealth unit, people familiar with the matter said in July.

"We look forward to welcoming our new team members from CommInsure and Sovereign in due course, and to building a successful partnership with CBA and ASB". The deal is expected to be completed by the end of 2018.



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