Westpac abandons life insurance with $ 660 million sale to Japanese Dai-ichi

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  • Westpac expects A $ 300m after-tax loss on transaction
  • Agreement to add 12 basis points to Westpac Tier 2 CET 1 capital ratio
  • Sale to be finalized in the second half of 2022

Aug.9 (Reuters) – Westpac Banking Corp (WBC.AX) on Monday became the latest Australian company to pull out of the life insurance business, accepting a A $ 900 million ($ 660 million) sale of its national unity to Japanese Dai. ichi Life Holdings (8750.T).

The deal highlights a swift exit by Australian lenders from areas considered to be outside of their core banking operations, following increased regulatory scrutiny since a government-backed investigation in 2018.

Companies such as Macquarie Group (MQG.AX), insurer Suncorp Group Ltd (SUN.AX) and wealth manager AMP Ltd (AMP.AX) have reduced their insurance exposure over the past five years.

“This transaction is another step in streamlining the bank,” said Jason Yetton, general manager of corporate activities and group strategy at Westpac.

For Dai-ichi, the deal offers another opportunity to boost its overseas business as Japan grapples with a declining population. He had bought Suncorp’s Australian life insurance business for A $ 640 million in 2018.

The Japanese company said the deal matches its medium-term plans to increase the group’s contribution to profits from its overseas life insurance business.

Westpac, which has already agreed to sell its general insurance and New Zealand life insurance businesses, said the deal would add about 12 basis points to its common equity Tier 1 capital ratio.

The lender expects an after-tax accounting loss of around A $ 1.3 billion on the sale, with around A $ 300 million to be realized in its fiscal year 2021 results.

The sale is expected to be finalized in the second half of 2022.

The lender also said it has signed an exclusive 20-year agreement with the local Dai-ichi unit, which insures more than 4.5 million Australians, to sell life insurance products to Westpac customers.

($ 1 = 1.3637 Australian dollar)

Reporting by Shashwat Awasthi and Riya Sharma in Bengaluru, additional reporting by Sameer Manekar; Editing by Muralikumar Anantharaman, Rashmi Aich and Amy Caren Daniel

Our standards: Thomson Reuters Trust Principles.


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