NAB completes stake sale to Nippon Life

NAB has concluded a run of divestments after completing the 80pc sale of its life insurance business to Nippon Life.

NAB chief customer officer, consumer and wealth, Andrew Hagger. Picture: Stuart McEvoy

National Australia Bank chief customer officer Andrew Hagger has rung the bell on the bank’s run of divestments after completing the 80 per cent sale of its life insurance business to Japanese conglomerate Nippon Life.

The $2.4 billion sale of the division concludes a recent string of spin-offs, including the float of the Clydesdale operations in Britain and the sale of a 28.5 per cent stake in US-based Great Western Bank.

It also follows the merger of five separate NAB-owned superannuation funds to create the country’s largest pension fund, MLC Super.

“We’re rewriting the rules of wealth in a modern day bank,” Mr Hagger said. “From a NAB perspective, this creates greater bandwidth for us in other areas.”

“Life insurance is a very capital intensive business. To be a modern day bank requires very good capital management,” he told The Australian.

The Nippon sale will add 50 basis points to NAB’s tier-1 capital ratio and will result in a writedown of goodwill between $1.6bn and $1.7bn. It also means Nippon Life is now Australia’s biggest life insurance operator.

The group’s smaller Japanese rival Dai-ichi Life bought Tower Australia, now known as TAL, in 2010 for $1.2bn and is one of the largest life insurance companies in the country.

Mr Hagger, who will continue as a director of the MLC life insurance business, which retains its current branding, said NAB would continue to have a strong presence overseeing the company at a time when the industry is under intense scrutiny.

The sector will soon front a parliamentary committee that will investigate whether the $44 billion industry needs even more oversight from regulators and the corporate watchdog after scandalous revelations at Commonwealth Bank’s business CommInsure.

Remuneration incentives for life insurance advisers are also in the firing line in a new bill set to be introduced into parliament this month.

“MLC has a very good reputation for its position within an industry,” Mr Hagger said. “The board will ensure the business is compliant with the law and will also carry forward what has been a positive environment around claims culture and around remuneration processes in the business for a long period of time.”

Nippon Life managing executive Hiroyuki Nishi said Australia’s unrivalled economic growth, its lucrative superannuation system and “strict regulation” had attracted the group to NAB’s business.

Peter Grey, former Australian Ambassador to Japan, will be the chairman of the life insurance business. Insurance veteran Andrew Cornish will join the board, as will Hiroyuki Nishi and Toshihiro Nakashima.