Westpac to take $1.1 billion hit on life insurance sale, but stock rises
The bank said 345 Westpac Life employees had joined TAL Dai-ichi Life, one of the world’s largest life insurers which covers more than 4.5 million Australians. After the acquisition, it has an estimated 20% market share of the Australian life insurance market, with around $5 billion in annual premiums. Challenger is Australia’s largest life insurer, with an estimated market share of 5%.
Westpac recorded $270 million of the total tax loss of $1.37 billion in its 2021 results. The loss relates to the difference between sale proceeds of $900 million and the book value of the company.
The positive performance of Westpac shares amid a weaker banking sector came after Goldman Sachs cut Westpac to a “buy” and added it to its “conviction list” of the most attractive stocks, on the basis of “our greatest level of comfort around the state of the franchise,” analyst Andrew Lyons said in a note.
Westpac said completing the life insurance deal would add 17 basis points to its capital tier 1 (CET1) capital.
The exit from insurance is part of its offloading of various “non-core” operations, including wholesale auto dealer finance operations, which were sold to Angle Finance, and the transfer of $38 billion managed on behalf of members of its BT Personal and Corporate Super funds to the Mercer Super Trust.
The sale leaves the investment platform unit Panorama as the only major disposal remaining. Final offers are expected at the end of this month and the market expects Westpac to bring in over $1 billion for the platform, which has just over $105 billion in assets under management. . Colonial First State is believed to be in pole position to buy it, with interest from Macquarie and AMP.
“After recently announcing the super and investment transactions, we are focused on announcing the sale of the platform in the coming months,” Westpac CEO Peter King said during the update. update of the bank’s strategy last week.
TAL CEO Brett Clark welcomed Westpac Life employees to TAL and said the insurer remains focused “on delivering the best possible results for all of our customers, partners and stakeholders”.
Westpac will release a Pillar 3 capital and quarterly performance report on August 15.