Newspaper icon
The latest issue of Financial Standard now available as an e-newspaper
CBA progresses with divestment to AIA

Commonwealth Bank has received another payment furthering the divestment of its life insurance business to AIA Group.

CBA has received a payment of approximately $450 million for the sale of CommInsure Life with the proceeds resulting in a pro forma increase to the bank's Common Equity Tier 1 ratio of eight basis points at June 30.

The payment follows a $500 million upfront payment in November 2019 and is part of the revised transaction path.

The bank said it now expects the ultimate completion of the divestment will occur via a statutory asset transfer in the second half of FY21, at which time the remaining proceeds of approximately $100 million should be received.

CBA has now received a total of $2.3 billion of proceeds made up of $2.1 billion in cash and $240 million in dividends payments from CommInsure Life.

The bank forecasts the completion of CommInsure Life will occur in the second half of 2021 upon payment of the $100 million.

The deal excludes the bank's 37.5% equity interest in BoCommLife Insurance Company.

It was only last month that a class action lawsuit was filed against CBA by Shine Lawyers on behalf of customers who obtained CommInsure life insurance products recommended by a CBA-licensed adviser.

Class Actions practice leader Craig Allsopp said group members were entitled to compensation because they incurred financial losses as a result of conflicted or incorrect advice from financial planners affiliated with or directly employed by CommInsure's parent company.

"We allege the Commonwealth Bank's licensed financial planners failed to inform their clients they could obtain substantially similar or better insurance policies with lower premiums from alternative insurers," Allsopp said.

Read more: CommInsure LifeCommonwealth BankAIA GroupShine Lawyers
Link to something KrtSNEh2