AIA Group to buy CAB’s life insurance businesses

AUCKLAND: AIA Group, the Hong Kong stock exchangelisted life insurer, wants to beef up life insurance cover across Australasia and broaden its distribution networks by buying Commonwealth Bank of Australia’s life insurance businesses for $A3.8 billion ($NZ4.1 billion).

The Hong Kongbased company yesterday agreed to buy CBA’s CommInsure Life and Sovereign Assurance and sign up to a 20year 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 marketleading position across Australasia and will start boosting earnings once it is completed.

The deal would also help AIA strip out at least $US60 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 Business Desk there were growth opportunities beyond the larger scale.

‘‘There’s an underinsurance issue that rests in both countries — it’s about having adequate cover,’’ Mr Mu said. Under the 20year partnership, products underwritten by AIA will be sold through CBA and its New Zealand subsidiary ASB Bank.

The deal is a fast turnaround for CBA, which first mooted the exit from its life insurance business last month after receiving unsolicited offers. — BusinessDesk