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MarketScreener Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  Commonwealth Bank of Australia    CBA   AU000000CBA7

COMMONWEALTH BANK OF AUSTRALIA

(CBA)
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Commonwealth Bank of Australia : Revises Life Insurance Deal

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08/22/2019 | 05:39pm EDT

By Robb M. Stewart

MELBOURNE, Australia--Commonwealth Bank of Australia has agreed to revise the proposed sale of its Australian life-insurance business to AIA Group, and now expects it to fetch 150 million Australian dollars (US$101 million) less than before.

The exit has been the subject of an ongoing regulatory approval process that the big Australian bank said had led to a period of uncertainty for CommInsure Life. The changes agreed to by the companies provides policyholders and staff with more clarity about the future of the business, CBA Chief Executive Matt Comyn said Friday.

The revised deal will comprise a joint cooperation agreement, reinsurance agreements, partnership milestone payments and a statutory asset transfer. In aggregate, Commonwealth Bank said it now expects proceeds of A$2.375 billion, with the arrangements implemented in a staged manner throughout the 2020 fiscal year.

The bank said it would receive about A$750 million by the end of the fiscal first half, and the remaining A$1.625 billion by the end of fiscal 2020.

The revised deal remains subject to a number of Australian regulatory approvals, as well as entering of reinsure arrangements.

By the end of the sale process, Commonwealth Bank forecast about A$1.6 billion-A$1.8 billion in common equity Tier 1 capital would be released, which would lift the bank's CET1 capital ratio by about 0.35-0.40 percentage points.

The bank said it remained committed to completing the sale of its 37.5% equity stake in BoCommLife. In May 2018, it agreed to exit the stake in a deal with Japan's MS&AD Insurance Group worth about A$668 million, subject to approval from China Banking and Insurance Regulatory Commission. The exit was planned to help to satisfy a condition of the proposed sale of the bank's life insurance businesses in Australia and New Zealand to AIA Group.

Write to Robb M. Stewart at robb.stewart@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AIA GROUP LTD 0.51% 78.75 End-of-day quote.21.15%
COMMONWEALTH BANK OF AUSTRALIA -0.61% 81.74 End-of-day quote.13.61%
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Financials (AUD)
Sales 2020 24 400 M
EBIT 2020 13 738 M
Net income 2020 10 047 M
Debt 2020 -
Yield 2020 5,35%
P/E ratio 2020 15,8x
P/E ratio 2021 15,6x
Capi. / Sales2020 5,92x
Capi. / Sales2021 5,83x
Capitalization 144 B
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Mean consensus UNDERPERFORM
Number of Analysts 13
Average target price 75,11  AUD
Last Close Price 81,74  AUD
Spread / Highest target 5,21%
Spread / Average Target -8,11%
Spread / Lowest Target -19,3%
EPS Revisions
Managers
NameTitle
Matthew Comyn Chief Executive Officer, Executive Director & MD
Catherine Brighid Livingstone Chairman
Alan Frank Docherty Chief Financial Officer
Pascal Boillat Chief Information Officer
Shirish Moreshwar Apte Independent Non-Executive Director
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