Sovereign could be on block

Sovereign — New Zealand’s largest life insurance business — could be sold.

Sovereign owner Commonwealth Bank of Australia revealed as part of its results announcement yesterday that it was in talks with third parties in relation to potential interest in its life insurance businesses.

“We are in discussions with third parties in relation to their potential interest in our life insurance businesses in Australia and New Zealand.

“The outcome of those discussions is uncertain,” CBA said.

However, it said that while the discussions may lead to the divestment of those businesses, it would also consider alternatives including retaining them, reinsurance arrangements or other strategic options.

Sovereign chief executive Nick Stanhope said it had briefed its teams on the CBA announcement.

“We have also shared with them that CBA has reaffirmed that the provision of insurance products to its customers remains core to its vision.”

Stanhope said it would remain “business as usual” for its staff, advisers and customers while the discussions took place.

Sovereign made a cash net profit of $102 million in the year to June 30 — down from $105m in the prior year. Its insurance income rose from $230m to $252m and its operating expenses fell.