Westpac offloads life business to TAL

  • By Elizabeth Fry

Westpac will sell its life insurance business to TAL Dai-ichi Life Australia for $900 million and enter a 20-year strategic alliance for the provision of life insurance products to Westpac’s customers.  

Westpac said the sale of its life business would release significant capital back to the bank. 

In an announcement to the Australian Securities Exchange, the bank said the sale represented a multiple of 0.96 times 2020 embedded value and included ongoing payments to Westpac. The total accounting loss on the sale was approximately $1.3 billion post-tax, while the transaction would add about 12 basis points to Westpac’s level 2 common equity tier 1 capital ratio. 

The lender said a post-tax loss of around $0.3 billion - reflecting transactions and separation costs - would be realised in the 2021 full year result, while the balance of loss would be recognised on completion of the sale. 

Jason Yetton, Westpac group head of specialist businesses and group strategy said the sale was another step in simplifying the bank.  

“Life insurance is an important product for many Australians and this sale provides certainty for customers and new opportunities for our people with TAL,” he said.  

Westpac will retain responsibility for certain pre-completion matters and protect TAL through a combination of provisions, warranties, and indemnities.  

Enhance scale and growth 

The deal is expected to be completed during the second half of the 2022 calendar year subject to regulatory approvals.   

“This acquisition will enhance TAL’s scale and investment capability for the benefit of all of our customers and partners, said TAL chief executive Brett Clark 

“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.  

“We look forward to building a successful partnership with Westpac and remain committed to continuing to deliver the best possible outcomes for all our existing partners, customers, and stakeholders. We look forward to partnering with Westpac to help more Westpac customers with their life insurance needs.”