Sydney, Australia (CU)_ Westpac Banking Corporation, the Australian bank and financial services provider based in Sydney, has planned to sell its Australian life insurance business to TAL Dai-ichi Life Australia Pty Ltd. for A$900 million ($660.2 million), and will no longer offer life insurance products. The chief executive of specialist businesses and group strategy of Westpac, Jason Yetton, expressed optimism about the new plan. He said, “This transaction is another step in simplifying the bank while continuing to help customers with their life insurance needs by partnering with TAL”.
Westpac WBC, 1.06 percent and TAL, a wholly owned division of Dai-ichi Life Group 8750, 3.32 percent, have also made a 20-year strategic agreement for the provision of life insurance products to Westpac’s Australian customers. The sale plan comes after Westpac has taken further efforts to simplify its offering, such as the sale of its Lenders Mortgage Insurance, Westpac Pacific, Auto Finance, and New Zealand Life Insurance businesses, as well as the separation of its General Insurance and Vendor Finance businesses, which was completed in recent times.
As part of the settlement, Westpac will receive the existing payments from TAL, which will release significant capital for the bank. According to the lender, the deal will add roughly 12 basis points to Westpac’s Level 2 common equity Tier 1 capital ratio, and the overall accounting loss on sale is nearly A$1.3 billion post-tax. A loss of A$300 million after tax is likely to be reported in Westpac’s fiscal 2021 results, mostly due to transaction and separation expenses, and the balance of the loss will be reported after the sale closes. According to Westpac, the acquisition is expected to close in the second half of 2022.
