Signage for Commonwealth Bank of Australia Photo:Brendon Thorne/Bloomberg

Herbert Smith Freehills has advised the Commonwealth Bank of Australia on a $1.6 billion (A$2.38 billion) divestment of its Australian life insurance business.

The Commonwealth Bank has agreed to a revised deal to sell CommInsure Life to Hong Kong-based AIA Group. The deal was initially agreed in 2017 for CommInsure Life to change hands for $3 billion (A$3.8 billion). The New Zealand part of the business was already transferred to AIA in 2018, but the Australian part of the deal, priced at the time at $1.7 billion (A$2.53 billion), wasn't able to close after delays in regulatory review process.

The revised deal will see the Commonwealth Bank receive $1.6 billion in proceeds and AIA receive an option for a five-year extension to a distribution joint venture in Australia and New Zealand.

As part of the new deal, AIA will buy all of CommInsure Life except for its 37.5% stake in Chinese insurer BoComm Life; the Commonwealth Bank will sell the BoComm Life holdings to Japanese life insurer Mitsui Sumitomo Insurance for $668 million. The BoComm Life stake sale had been part of the closing conditions of the AIA deal; the revised structure has now ringfenced the BoComm Life holdings and allows the rest of CommInsure Life sale to proceed.

A Sydney-based Herbert Smith Freehills team was led by M&A partner Tony Damian and assisted by financial services partner Michael Vrisakis.

The firm worked closely with Commonwealth Bank's internal M&A team, led by in-house counsel Mark Alexander.

Damian also recently led a Herbert Smith Freehills team advising Commonwealth Bank on the $2.8 billion sale of its global asset management arm to Mitsubishi UFJ Financial Group Inc. He is currently advising the bank on a sale of its financial advisory business Count Financial.

Ashurst represented AIA on the deal.

The revised deal is still subject to regulatory approvals in Australia and is expected to close in 2020.

*Updated Aug. 28: This story has been updated to clarify various deal values in Australian dollar and that AIA will receive an option for a five-year extension in distribution joint venture. 

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