Suncorp Group has agreed to offload its Australian life insurance business to TAL Dai-ichi Life Australia, a subsidiary of Japan’s Dai-ichi Life Group, for about A$725m ($538.8m).
Suncorp and TAL have entered into a heads of agreement in this regard and expect binding legal agreements to be shortly finalized.
TAL said that the deal brings two major life insurance businesses together along with a long term relationship with the Suncorp Group including a portfolio of well-established Australian brands such as AAMI, APIA and GIO.
A 20-year alliance is part of the agreement between the insurance companies. According to the terms, TAL will offer life insurance solutions through the Australian distribution channels of Suncorp, including its digital channels, contact centers and store network.
TAL Group CEO and managing director Brett Clark said: “This transaction will significantly expand TAL’s market leading presence in Australia and will provide exciting opportunities for us with additional trusted and recognised brands, and a broader group of financial advisers.
“This acquisition will enhance TAL’s scale and capability across the retail, group and direct segments, and will open up important new distribution channels. 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 to meet their diverse needs.”
Suncorp will continue to make income on the distribution of life insurance as per the proposed strategic alliance.
For the Australian general insurer, the transaction represents the completion of a comprehensive strategic review of its Australian life insurance business. The review also involved the assessment of various options like additional reinsurance, partnership arrangements and divestment.
Suncorp CEO & managing director Michael Cameron revealed that the sale of the life insurance business was the superior option, as it will simplify the company’s business model, thereby enabling a significant release of capital to shareholders, while being accretive to Cash ROE.
Cameron added: “The long-term strategic alliance between TAL and Suncorp will allow us to offer excellent value to Suncorp’s Australian customers. The strategic alliance will leverage the strengths of our respective organisations to deliver a superior customer experience.”
The transaction is expected to be closed by the year end, subject to the satisfaction of conditions and approvals in both Australia and Japan.