Commonwealth Bank has agreed to sell its life insurance operations to Asia's AIA for $3.8 billion and could slim down further by offloading its global asset management business.
The sale of CommInsure Life and NZ equivalent Sovereign - which CBA flagged in August when it announced a $9.9 billion annual profit - includes a 20-year deal for CBA to distribute AIA life insurance products in Australia and New Zealand.
The deal does not include general insurance and CBA will continue to use the CommInsure brand, earning income on the distribution of life and health insurance.
CBA chief executive Ian Narev said the lender remained committed to providing high quality products.
"We have said for some time that while distributing life insurance is a fundamental part of that strategy, we were open to different models for doing so," Mr Narev said on Thursday.
The combination of AIA's leading insurance capability and scale and CBA's broad distribution, plus complementary commitment to customer focus and innovation, mean the partnership will create an even better customer experience and improved efficiency, he said.
Investors greeted the news warmly, initially driving CBA shares 0.7 per cent higher before they were caught up in the malaise affecting other banking stocks.
CBA shares were down 0.2 per cent at $76.135 at 1445 AEST, but were the best performing among the big four banks.
Next on the chopping block for CBA could be Colonial First State Global Asset Management, with the lender undertaking a strategic review of the global asset manager.
CBA said its options included spinning off the business and listing it separately.
The life insurance sale will be recorded as a loss of about $300 million for CBA, but will release approximately $3 billion of common equity tier 1 capital.
That will lift CBA's CET1 ratio by about 0.7 per cent to 10.8 per cent, above the 10.5 per cent benchmark the Australian Prudential Regulation Authority has instructed the big banks to reach by January 2020.
The sale follows similar moves by rivals ANZ and National Australia Bank to cut their exposure to wealth management.
CBA's wealth management group executive, Annabel Spring, will oversee the divestment and strategic review until she leaves the bank in December.
Michael Venter, who is currently chief financial officer of CBA's international financial services, has been appointed chief operating officer for wealth management and will lead the unit following Ms Spring's departure.
CommInsure was hit by controversy in 2016 when its managers were accused of pressuring doctors to alter medical opinions so it could deny claims.
The corporate watchdog in March cleared CommInsure of the allegations but said some practices were "out of step with community expectations".
Hong Kong-listed AIA is the largest independent publicly listed pan-Asian life insurance group and will become the market leader in both Australia and New Zealand with the purchase.
