AIA, Zurich in race to buy CommInsure, Sovereign

Commonwealth Bank’s move to sell CommInsure will gather momentum in the next few days, after AIA Group and Zurich Insurance lobbed bids to buy the troubled insurer.

The two companies met the expedited deadline last night and put in final and binding offers which could value CommInsure and the New Zealand Sovereign business at more than $4 billion.

CBA will consider the offers over the next few days and is expected to select a preferred bidder by the middle of next week. Negotiations will then become exclusive and DataRoom understands CBA is keen for a speedy resolution.

AIA, the Asian insurance group, was thought the most likely group to buy CommInsure given regulation in its home region is not as onerous as, say, in the US. CBA’s Austrac scandal has reportedly repelled potential US buyers.

But last night there were some suggestions that AIA might only want the Australian assets, while Zurich has stuck with the process to buy both. CBA wants a deal for both CommInsure and Sovereign.

US life insurance giant MetLife was late to the sales process but it was only interested in the New Zealand assets.

Convincing the US authorities that buying a life insurance business from a bank under investigation for alleged money laundering and potential terror funding would be impossible, so MetLife pulled out to centre its focus on ANZ.

MetLife has reportedly locked in the funding for its bid to buy ANZ’s life business, as the sales process headed towards a finale. MetLife is expected to deliver its offer to the bank’s board tonight to be closely examined by directors and adviser Goldman Sachs.

The US firm is believed to have a funding agreement in place with domestic and overseas banks.

MetLife has Morgan Stanley as an adviser. Observers have questioned whether the investment bank could use its balance sheet in any capacity as a lender.

Similarly, whether ANZ would act as a financier to the successful bidder is also being watched.

Zurich is thought to be working on an ANZ plan but that appeared somewhat uncertain last night. The ANZ wealth management assets are expected to fetch about $4bn, but a decision on the successful bidder might not be forthcoming anytime soon, with the approvals not expected before November.

A key part of the ANZ board’s consideration will be the bancassurance agreements put in place with the successful bidder.

Under the sales agreement, ANZ will continue to sell wealth management products through its branches and they will carry its brand, but the products will be manufactured through the successful buyer.

DataRoom has been told at least one Chinese party showed interest in the ANZ’s assets but its initial approach was knocked back because the bank wanted a buyer with experience in wealth management.