The prospect of the sale was confirmed in August, when CBA said it was in talks with third parties.
As part of the agreement, CBA will have a 20-year partnership with AIA for the provision of life insurance products to customers in Australia via CommInsurance Life and in New Zealand via Sovereign.
Under the terms of the partnership, CBA will continue to earn income on the distribution of life and health insurance products.
The transaction and partnership do not include general insurance and CBA will retain the CommInsurance brand.
AIA is the largest independent publicly listed pan-Asia life insurance group and has well-established life insurance businesses in Australia and New Zealand.
The acquisition of CommInsure Life and Sovereign will make AIA the market leader in both countries, according to a statement on the Australian Stock Exchange.
Ian Narev, CBA’s chief executive, said: “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.
The combination of AIA’s leading insurance capability and scale and Commonwealth Bank’s broad distribution, and our complementary values and commitment to customer focus and innovation, mean that a partnership between us will create an even better experience for our customers, in a more efficient way for our shareholders.”
Keng Hooi Ng, chief executive and president of AIA Group, added: “The acquisition of CBA’s life insurance businesses and the new 20-year bancassurance partnership with CBA will strengthen AIA’s protection market leadership and expand our distribution capabilities in these markets.”