Commonwealth Bank eyes sale of asset management business after offloading life insurance arm for $3.8 billion

THE Commonwealth Bank is set to review its global asset management business, Colonial First State, following the sale of its life insurance division to Asia’s AIA for $3.8 billion.

The Commonwealth Bank is selling its life insurance business to Hong Kong’s AIA for $3.8 billion, lifting the Aussie lender’s tier-one capital ratio above the industry mandated 10.5 per cent level.

THE Commonwealth Bank is set to review its global asset management business, Colonial First State Global Asset Management, following the sale of its life insurance division to Asia’s AIA for $3.8 billion.

It’s a partial retreat on the part of the CBA on its controversial CommInsure brand, although it will continue to offer general insurance and continue to earn income on the distribution of life and health insurance.

The CBA said the sale was expected to boost its tier-one capital by about $3 billion, lifting it above the 10.5 per cent benchmark the banking regulator has instructed the big banks to achieve by 2020.

The sale of CommInsure Life and its New Zealand-based equivalent Sovereign — which CBA flagged last month when it announced a $9.9 billion annual profit — includes a 20-year deal for the Australian bank to distribute AIA life insurance products on both sides of the Tasman.

CBA chief executive Ian Narev said yesterday the lender remained committed to providing high quality products.

“We have said for some time that while distributing life insurance is a fundamental part of that strategy, we were open to different models for doing so,” Mr Narev said.

“The combination of AIA’s leading insurance capability and scale and Commonwealth Bank’s broad distribution, and our complementary values and commitment to customer focus and innovation, mean that a partnership between us will create an even better experience for our customers, in a more efficient way for our shareholders.”

CBA wealth management head Annabel Spring will oversee the sale of the bank’s life insurance arm before departing the company in December.

The sale follows similar moves by rivals ANZ and National Australia Bank to cut their exposure to wealth management.

CBA also said the head of its wealth division, Annabel Spring, would be leaving the lender in December.

Michael Venter, who is currently chief financial officer of CBA’s international financial services, has been appointed chief operating officer for wealth management and will lead the unit following Ms Spring’s departure.

CommInsure was hit by controversy in 2016 when its managers were accused of pressuring doctors to alter medical opinions so it could deny claims.

The corporate watchdog in March cleared CommInsure of the allegations but said some practices were “out of step with community expectations”.

Hong Kong-listed AIA is the largest independent publicly listed pan-Asian life insurance group and will become the market leader in both Australia and New Zealand with the purchase.