It was just a few days ago that rumours of an imminent sale of Westpac’s life insurance business were reported – and now that deal has been sealed.
Today it was officially announced by TAL Dai-ichi Life Australia Pty Limited (TAL) that it had signed a binding share sale agreement to pick up the banking giant’s life insurance business for a cash consideration of $900 million, plus adjusted net worth on completion. The deal remains subject to regulatory approvals.
In addition, the deal creates a 20-year strategic alliance between Westpac and TAL – meaning that the bank’s existing life insurance customers and partners will now receive TAL’s insurance offerings, and new Australian customers will also be offered the solutions.
“Westpac is Australia’s first bank and oldest company, and we are delighted to be partnering with one of Australia’s largest and most significant companies,” said TAL group CEO and managing director Brett Clark. “Both TAL and Westpac share a strong belief in the value of life insurance in the community. Westpac’s ambition is to ‘help Australians succeed’ and TAL looks forward to supporting Westpac and its customers in meeting that ambition by providing high-quality life insurance outcomes for their customers.”
Clark went on to note that the deal reflected a “strong commitment” to the Australian market – describing it as a “key component”.
“This acquisition will enhance TAL’s scale and investment capability for the benefit of all of our customers and partners,” he said. “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.”
In its own announcement, Westpac noted that it would now by exiting manufacturing life insurance products and that the total accounting loss on sale would be approximately $1.3 billion post-tax. The deal will also add around 12bps to Westpac’s level two common equity tier one capital ratio. It expects to take on around a $0.3 billion post-tax loss in its FY21 results to reflect transaction and separation costs.
“This transaction is another step in simplifying the bank while continuing to help customers with their life insurance needs by partnering with TAL,” said Westpac group chief executive of specialist businesses and group strategy, Jason Yetton.
“Life insurance is an important product for many Australians and this sale provides certainty for customers and new opportunities for our people with TAL.”
Completion of the transaction is expected to occur in the second half of 2022, with Westpac retaining responsibility for certain pre-completion matters and providing protection to TAL via provisions, warranties and indemnities.
