Commonwealth Bank has renegotiated the sale of its CommInsure life insurance business to Hong Kong-based AIA for a reduced $2.375 billion.
CBA says it will receive $150 million less than the original sale price and AIA now has the option to extend its respective Australian and New Zealand distribution agreements from 20 years to 25 years.
CBA had in 2017 agreed to sell CommInsure Life and NZ equivalent Sovereign to AIA for a total $3.8 billion but the deal was held up by the regulatory approval process.
Chief executive Matt Comyn said the agreement provided both policyholders and staff with clarity about the future of the business, while continuing the simplification of CBA’s portfolio.
“We … are working hard with our partner to develop a new generation of products for CBA’s customers, which will deliver excellent customer outcomes,” Mr Comyn said.
Mr Comyn’s predecessor, Ian Narev, was in charge when the initial deal was announced.
CBA expects to receive about $750 million of proceeds and distributions by the end of the current first half, with the remainder to follow by the end of FY20.
The bank said it was still committed to selling its 37.5 per cent stake in Chinese insurer BoCommLife.
The $668 million sale to Japan’s Mitsui Sumitomo announced in May 2018 was a condition of its original deal to sell its local life insurance businesses.
At 1035 AEST, CBA shares were 0.25 per cent higher at $77.30, in line with the overall market.
In a separate announcement, CBA said it had appointed Telstra general counsel Carmel Mulhern to fill the same role with the lender from January.
Scott Wharton, who has been dealing with the implementation of the Australian Prudential Regulation Authority’s recommendations following its inquiry into CBA’s governance and accountability, has been moved to a new role as group executive for program delivery.