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Big 4 exits life insurance business for $900m
Westpac is divesting its life insurance business for an impressive $900 million, allowing the bank to infuse significant capital back into its operations.
Big 4 exits life insurance business for $900m
Westpac is divesting its life insurance business for an impressive $900 million, allowing the bank to infuse significant capital back into its operations.
Westpac is selling its life insurance business, Westpac Life Insurance Services Limited, to TAL Dai-ichi Life Australia for $900 million and entering an exclusive 20-year strategic alliance for the provision of life insurance products to Westpac’s customers, the bank confirmed in an ASX listing.
The announcement confirmed that the sale represented a multiple of 0.96x FY20 embedded value and included ongoing payments to Westpac.
“The transaction sees Westpac exit manufacturing life insurance products and releases significant capital back to the bank,” the big four said.
The total accounting loss on sale is approximated at $1.3 billion post-tax, while the transaction will add some 12 bps to Westpac’s Level 2 common equity Tier 1 capital ratio.
A post-tax loss of around $0.3 billion, reflecting predominantly transaction and separation costs, was expected to be realised in the group’s FY21 results, while the balance of loss would be recognised on completion of sale.
Applauding the transaction, Westpac Group chief executive, specialist businesses and group strategy, Jason Yetton said it represents “another step in simplifying the bank while continuing to help customers with their life insurance needs by partnering with TAL”.
“Life insurance is an important product for many Australians and this sale provides certainty for customers and new opportunities for our people with TAL,” Mr Yetton said.
“TAL already offers insurance products to more than 4.5 million Australians and is well placed to help Westpac’s customers protect the people they love.”
The completion of the transaction is expected to occur in the second half of 2022, following several regulatory approvals.
TAL is a fully owned subsidiary of the Dai-ichi Life Group, considered one of the world’s leading life insurers.
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