CBA sells Indonesia life insurance business

CBA’s exit from life insurance continues with a $426m sale of its 80pc interest in its Indonesian business to FWD Group.

The deal is the latest in CBA’s move away from life insurance Pic: Hollie Adams

The Commonwealth Bank’s exit from life insurance continued with a $426 million deal to sell its controlling interest in its Indonesian life insurance business to pan-Asian insurer FWD Group.

The bank said as part of the transaction to sell its 80 per cent interest in PT Commonwealth Life, its Indonesian banking business will enter a 15-year life insurance distribution partnership with Pacific Century Group’s FWD.

There is the potential for additional payments to Commonwealth Bank over time, subject to the performance of the distribution partnership.

The bank said the sale is expected to generate a gain of about $140 million and increase its common equity tier 1 capital ratio by 0.07 percentage point.

The deal in Indonesia follows the completion in July of Commonwealth Bank’s sale of Sovereign in New Zealand to AIA Group.

The bank is waiting for regulatory approvals on agreements to sell CommInsure Life in Australia to AIA and its 37.5 per cent interest in BoComm Life in China to Mitsui Sumitomo Insurance. It expects to finalise the sales by the middle of 2019.

The move follows damaging evidence in the banking royal commission last month about CBA’s life insurance business.

The inquiry heard CBA denied the claim of a life insurance customer who suffered a heart attack by using out-of-date medical definitions and then misled the Financial Ombudsman Service by covering up advice it had received from a doctor when the customer complained.

Dow Jones Newswires