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AIA hands over first payment for CommInsure

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The Commonwealth Bank (CBA) has received its first cash payment of $500 million from AIA for the sale of CommInsure Life.

The 25-year distribution agreement between CBA and AIA has also been triggered, the bank says.

Colonial Mutual Life Assurance has implemented reinsurance arrangements that are expected to result in a $200 million distribution to CBA by the end of the first half of the 2020 financial year. CBA is yet to receive $250 million in other proceeds.

AIA must also pay four $50 million payments to CBA as the partnership progresses. The first one is due in the first quarter of the 2020 financial year.

CBA sold CommInsure to AIA at a $150 million discount on the original price of $2.5 billion, after it had to quarantine its efforts to sell its 37.5% interest in Chinese insurer BoCommLife from the rest of the agreement. The Chinese banking regulator is delaying regulatory approval for the sale to Japanese insurer Mitsui Sumitomo.

CBA CEO Matt Comyn says the bank is working hard with AIA to develop a new generation of products for its customers.