Westpac has announced it will sell its Australian life insurance business to TAL Dai-ichi Life Australia in a deal worth $900 million to the bank.
Under a 20-year deal, Westpac will cease the manufacturing life insurance but continue to distribute products from TAL to clients. Westpac shares rose 1 per cent at the open in line with rival banks.
The bank will book a $1.3 billion accounting loss while the transaction will add about 12 basis points to its common equity tier 1 (CET1) ratio. The deal is expected to be completed in the second half of 2022.
The transaction was conducted at a multiple of 0.96 times embedded value and includes ongoing payments to Westpac. Westpac will provide TAL with a combination of provisions, warranties and indemnities.
Westpac’s group chief executive specialist businesses and group strategy, Jason Yetton, said life insurance was an important product for the bank’s customers and he was happy to partner with TAL in this way.