In the release of its full-year results this morning, CBA said it is looking at divesting 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,” CBA said
“The outcome of those discussions is uncertain. While the discussions may lead to the divestment of those businesses, we will also consider a full range of alternatives, including retaining the businesses, reinsurance arrangements or other strategic options.
“CommInsure and Sovereign are strong businesses with scale, expertise, competitive products and access to attractive distribution channels.”
Meanwhile, CBA recorded a full-year cash net profit after tax of $9.88 billion, up 4.6 per cent on the previous year.
The wealth management business saw a cash net profit after tax of $553 million, down from $612 million the previous year, while retail banking services recorded a cash net profit of $4,964 million, up from $4,540 million the previous year.
The results come days after AUSTRAC commenced civil proceedings against the bank for alleged money laundering breaches.
CBA will release its annual report on Monday, which will contain the remuneration report for CBA executives.
The potential divestment of CommInsure follows similar moves by competitors, with MLC selling its life business to Japanese insurer Nippon Life and Suncorp slating potential divestment of Asteron Life. ANZ’s wealth business is also on the market.
The banks have planned this well. By slashing of commissions and the increase in claw backs they can now ask for a much higher price for their insurance businesses by claiming they have halved operating expenses (distribution costs) therefore the business is now more profitable. But to their folly they have underestimated the impacts on new business sales which will fall through the floor very soon.
I am just staggered by what the major banks have done with the life insurance industry here in Australia over the last 2 to 3 years and what they are now seem to be doing!
This might be a fairly simplistic approach and an inaccurate understanding from my perspective but as I see it, they first butcher the industry for advisers and consumers by courting federal ministers and industry bodies to make horrendous legislative changes that have now been passed and left for advisers to endure and suffer.
Then, when all those changes are made they bail and offload the poisoned chalice!
OMG! What the hell!
Bring on the Banking Royal Commission now as far as I’m concerned. You can all hang from the highest post.
Not at all, your analysis is in depth, and complete. This was planned, designed, and perfectly executed (aided by government, thank you). advisers, jammed. consumers, who are they again, Jammed! what did everyone think they were going to do. It’s an oligopoly. these institutions are top 50 in the world and worth billions, they don’t fear governments, governments fear them. Jammed again. take note everybody, this is what effective lobbying looks like.
Next it will be AFSL’s
What a surprise ! I think that’s been afoot for a while as Comminsure only provides 8% of CBAs group profit. And then there’s all those splashy penalties from ASIC for poor personal advice
The real question is whether ASIC will permit bank tellers to flog “direct style ” insurance products with loans on GENERAL ADVICE. That will be a disaster !!!