AIA Group buys Australian insurer for S$4.1b

HONG KONG-BASED insurer AIA Group is making its largest acquisition with a A$3.8 billion (S$4.1 billion) purchase of Commonwealth Bank of Australia's life insurance business that will make it the largest life insurer in Australia and New Zealand.

Under the agreement, AIA partners Commonwealth Bank for 20 years to provide life insurance products to customers in Australia and New Zealand, the lender had on Thursday said.

AIA expects the transaction to generate ongoing pre-tax cost savings of at least US$60 million per year within three years of completion.

Separately, Australia and New Zealand Banking Group has reportedly invited AIA, MetLife Inc and Zurich Insurance Group AG to make second-round offers for its insurance and wealth business by Sept 15. The deal could be worth about US$3 billion.

Australian local banks' insurance units have struggled amid growing competition from the pure-play and large foreign insurance companies. New regulations demanding increased capital buffers for their main banking operations also factor in.