CBA takes different route to selling insurance businesses

Legal firm Herbert Smith Freehills has revealed that Commonwealth Bank of Australia (CBA) and AIA Group have agreed to a revised transaction path, which involves entering into a joint cooperation agreement.

The law firm, which is advising CBA on the transaction, said the agreement supports “joint activity and management across the AIA Australia and CommInsure Life businesses, reinsurance arrangements, partnership milestone payments and a statutory asset transfer as an alternative approach to completing the divestment of CommInsure Life”. 

The expected proceeds from the transaction for CBA are $2.375 billion. 

The new plan is yet to receive regulatory and board approvals. 

Herbert Smith Freehills partner Tony Damian commented: “M&A activity in the financial services sector is running at very high levels. We’ve seen a number of large deals in the market over the past couple of years. Many of the deals, including this one, have a cross-border element.”

The law firm is also advising CBA on the sale of its financial advice business, Count Financial, and had advised the major bank on the $4.2-billion sale of its global asset management arm, Colonial First State Global Asset Management, which was completed earlier in August. 

The major bank also sold its 37.5 per cent stake in BoComm Life Insurance, which it jointly owns with China’s Bank of Communications, to Japan’s Mitsui Sumitomo Insurance.