Westpac has agreed to sell Westpac Life Insurance Services to TAL Dai-ichi Life Australia (TAL), with the two companies creating a 20-year strategic alliance for the provision of life insurance products to Westpac’s Australian customers.
According to Westpac, the sale price of $900 million represents a multiple of 0.96x FY20 embedded value. In addition, the transaction includes ongoing payments to Westpac.
The transaction means Westpac will no longer create life insurance products and releases “significant” capital to the bank. Westpac says the total accounting loss on the sale is approximately $1.3 billion post-tax, while the transaction will add approximately 12 basis points to Westpac’s Level 2 common equity Tier 1 capital ratio. A post-tax loss of about $0.3 billion, reflecting predominantly transaction and separation costs, is expected to be realised in the Westpac’s FY21 results, while the balance of the loss will be recognised on completion of the sale.
TAL is a fully-owned subsidiary of Dai-ichi Life Group, which Westpac described as one of the world’s leading life insurers.
“This transaction is another step in simplifying the bank while continuing to help customers with their life insurance needs by partnering with TAL,” said Jason Yetton, Chief Executive Specialist Businesses & Group Strategy at Westpac Group.
TAL Group CEO and Managing Director, Brett Clark, said the acquisition confirms TAL’s and Dai-ichi Life’s commitment to the Australian life insurance market and community.
“The Australian life insurance market is a key component of Dai-ichi Life’s global strategy, and this acquisition will enable TAL to extend our life insurance experience and capabilities to Westpac’s customers now and into the future,” Clark said.
“This acquisition will enhance TAL’s scale and investment capability for the benefit of all of our customers and partners. It will provide us with a strong base for continued growth and reflects our ongoing commitment to offering Australians a range of life insurance options and services to meet their diverse needs. In addition, this transaction will provide exciting opportunities for our people and, on completion, we also look forward to welcoming the Westpac Life team to TAL.”
Completion of the transaction is subject to regulatory approvals and is expected to occur in the second half of the 2022 calendar year.