Japan’s Dai-ichi Life Holdings has been confirmed as buying Westpac’s Australian life insurance business for $900 million.
The purchase will be done through the old TAL insurance business that Dai-ichi bought in 2011. In 2018 the company bought Suncorp’s Australian life business for $720 million.
Westpac’s life business was the 6th biggest in Australia
It has a customer base of more than 14 million and 5 million online users. Insurance premiums and other revenues amount to $1.1 billion last financial year.
Dai-ichi hopes to benefit from Australia’s growing market, where the population is increasing, unlike Japan’s which is shrinking as it ages.
Before the purchase Tal Dai-ichi was already the largest life insurer in Australia. Post the deal TAL will control one-third of the market.
Westpac said in a statement that it expects an after-tax accounting loss of about $1.3 billion on the sale, while the deal will add about 12 basis points to its level 2 common equity tier 1 capital ratio.
The sale is expected to be completed in the second half of next year.
The lender also said it signed an exclusive 20-year deal with Dai-ichi’s local unit, which insures more than 4.5 million Australians, to sell life insurance products to Westpac’s customers.
ANZ sold its insurance business to Zurich and the CBA sold its life business to AIA of general insurance arm to South African group, Hollard.
Elsewhere in Australian banking the National Australian Bank has confirmed it will buy the domestic consumer business of US major Citibank for the value of the net assets, plus a $250 million premium.
NAB said the required equity to support the new business on its balance sheet will be around $1.2 billion which represents a premium of eight times the Citi consumer businesses net profit of $145 million for the year ending June 30, this year.
“The proposed acquisition of the Citigroup Consumer Business brings scale and deep expertise in unsecured lending, particularly credit cards, which continue to be an important way for customers to make payments and manage their cash flows,” NAB chief executive Ross McEwan said in Monday’s statement.
The NAB will get from proposed acquisition a $7.9 billion home loan portfolio, $4.3 billion of unsecured lending, $9 billion of retail deposits and a wealth management business.
Seeing NAB has sold its wealth management business (MLC) then that will go.
Citigroup’s institutional business in Australia is not included in the transaction.
About 800 Citigroup employees and executives are expected to move over to NAB as part of the acquisition.
Citigroup’s institutional business (investment banking and funds advice and management) in Australia is not included in the transaction.
The deal is expected to settle by next March and needs the usual approvals.
