Thursday 21st September 2017
|Text too small?|
AIA Group, the Hong Kong stock exchange-listed life insurer, wants to beef up life insurance cover across Australasia and broaden its distribution networks with the A$3.8 billion purchase of Commonwealth Bank of Australia's life insurance businesses.
The Hong Kong-based company today agreed to buy CBA's CommInsure Life and Sovereign Assurance and sign up to a 20-year partnership where the bank will keep selling those products. The acquisition, which is subject to regulatory approval on both sides of the Tasman, would catapult AIA into a market leading position across Australasia and will start boosting earnings once it's completed. The deal is also seen helping AIA strip out at least US$60 million of annual duplicated costs within three years, it said in a statement to the Hong Kong exchange.
AIA Australia and New Zealand chief executive Damien Mu told BusinessDesk that there are growth opportunities beyond the larger scale.
"There's an underinsurance issue that rests in both countries - it's about having adequate cover," Mu said. "We look at cover, what's in place in relation to what customers need, and there's a gap."
The 20-year partnership will see products underwritten by AIA sold through CBA and its New Zealand subsidiary ASB Bank with brands relevant to customers. The deal doesn't exclude AIA's other distribution partners, and AIA regional head Bill Lisle says that's part of the wider's group's multi-channel approach across Asia, which "then gives customers the choice how, when and where they have products - that's key to our success."
The deal is a fast turnaround for CBA, which first mooted the exit from its life insurance business last month after receiving unsolicited offers.
Lisle said AIA has had "a very disciplined approach" to capital allocation since its initial public offering in 2010. The company is a pure-play life insurer in that it doesn't offer other products, and while most of its growth has been internal and organic, Lisle said it's willing to buy other firms if they're the right fit and boost earnings.
AIA's Hong Kong-listed shares increased 0.1 percent to HK$60.10, while CBA's ASX-listed stock slipped 0.1 percent to A$76.185.
No comments yet
NZ dollar stalls after Bascand's rate cut comments
Bascand says RBNZ will consider changing bank capital proposals
Affordable electricity key to decarbonisation - Genesis
Graeme Hart trims global packaging empire with US$615m asset sale
Stronger-than-expected inflation won't deter November rate cut - economists
Contact in talks on 13MW dairy boiler project
Restaurant Brands forecasts 10% growth in FY2020
Domestic inflation rises at fastest annual pace in eight years
16th October 2019 Morning Report
NZ dollar falls against British pound on Brexit hopes, CPI in focus