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The deal underlines a rapid exit by Australian lenders from insurance businesses, as increased regulatory scrutiny following a 2018 Royal Commission led them to double down on their banking business and streamline operations.
Companies including conglomerate Macquarie Group (OTC:MQBKY), insurer Suncorp Group Ltd and wealth manager AMP (OTC:AMLTF) Ltd have cut their exposure to the sector in the last five years.
“This transaction is another step in simplifying the bank,” said Jason Yetton, chief executive officer of Westpac’s specialist businesses and group strategy.
For Dai-ichi, the deal provides another avenue to boost its overseas business as Japan grapples with a declining population. The company bought Suncorp’s Australian life insurance business for A$640 million in 2018.
Dai-ichi did not immediately respond to a request for comment.
Westpac, which has already agreed to sell its general insurance and New Zealand life insurance arms, said the deal will add about 12 basis points to its level 2 common equity tier 1 capital ratio.
The lender expects an after-tax accounting loss of about A$1.3 billion on the sale, with about A$300 million to be realised in its fiscal 2021 results.
The sale is expected to be completed in the second half of 2022.
The lender also said it signed an exclusive 20-year deal with Dai-ichi’s local unit, which insures more than 4.5 million Australians, to sell life insurance products to Westpac’s customers.
($1 = 1.3637 Australian dollars)
