AIA poised to acquire Australian bank’s insurance business

Major insurer pegged as frontrunner to make US$4bn purchase in lucrative market

AIA poised to acquire Australian bank’s insurance business

Insurance News

By Gabriel Olano

Pan-Asian insurer AIA is reportedly primed to acquire CommInsure, Commonwealth Bank of Australia’s (CBA) life insurance unit, according to sources.

AIA beat Thursday’s deadline to submit a bid for CommInsure, which is valued at around US$4 billion. CBA announced it was already in talks to sell its life insurance business last month, but it has yet to announce the official buyer.

According to sources quoted by The Australian, AIA is the likely frontrunner in the race to buy CommInsure. It is reportedly working with Deutsche Bank for the deal, while CBA is advised by JPMorgan.

Already considered one of the leading insurers in Australia, AIA’s market share could grow even more if the deal is successful.

According to analysts, Australia is an appealing market for global insurers, as its economy and population are growing at a faster rate than most developed insurance markets. A stable regulatory regime is also seen as a positive factor for investors.

Many Australian banks’ insurance arms have struggled competing against foreign insurers, partly due to new regulations mandating an increase in capital reserves for banking operations. This presents opportunities for foreign firms, especially those from fund-rich Asian markets, to step in.

Late last year, Japanese insurer Nippon Life bought an 80% stake in the life insurance business of National Australia Bank, the country’s third-largest lender in terms of assets, for US$1.9 billion.

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