Commonwealth Bank (CBA) yesterday announced the sale of its 80% interest in its Indonesian life insurance business, PT Commonwealth Life (PTCL), to FWD Group (FWD) of Hong Kong.
As part of the transaction, CBA’s Indonesian banking business, PT Bank Commonwealth (PTBC), will enter into a 15-year life insurance distribution partnership with FWD.
The consideration attributable to CBA on completion is expected to be A$426m ($300m), with potential additional payments payable over time, subject to the performance of the distribution partnership. Under the terms of the partnership, PTBC will continue to earn income on the distribution of life insurance products.
PTCL customers will retain all of the current benefits of their existing policies and the partnership with FWD will allow PTBC’s banking customers to retain access to high quality life insurance products.
Upon completion, the deal is expected to result in a post-tax gain on sale of approximately A$140m for CBA.
In a statement, CBA says that the transaction aligns with its strategy to focus on its core banking businesses and to create a simpler and better bank and is expected to complete in the first half of 2019, subject to regulatory approvals in Indonesia.
Other life insurance divestments
Yesterday’s announcement followed the completion of CBA's divestment of Sovereign in New Zealand to AIA Group in July 2018. The announced divestments of CommInsure Life in Australia to AIA Group and CBA’s 37.5% interest in BoComm Life in China to Mitsui Sumitomo Insurance are still pending regulatory approvals. These divestments are now expected to complete in the first half of 2019.
Established in 1992, PTCL is the Indonesian life insurance business of CBA. It partners with CBA’s Indonesian banking business, PTBC. It has a presence in 20 major cities in Indonesia and serves over 400,000 individual and group policyholders.
FWD is the pan-Asian insurance business of investment group, Pacific Century Group, and was established in 2013 through the acquisition of ING Groep's Hong Kong and Thailand business. FWD has grown rapidly across Asia, including Indonesia.