The latest market analysis from GlobalData;
TAL Dai-ichi Life Australia, a wholly owned subsidiary of Japan-based Dai-ichi Life Holdings, has recently signed a binding share sale agreement to acquire Westpac Banking Corp’s life insurance business in Australia for AUD900m (US$660m). The agreement will allow TAL to strengthen its position as the largest life insurer in in Australia, says GlobalData, a leading data and analytics company.
The deal also includes an exclusive long-term 20-year strategic alliance through which TAL will provide life insurance products and services to Westpac’s existing customers and partners.
GlobalData reveals that the Australian life insurance industry was valued at AUD34.8bn (US$24.1bn) in 2020, in terms of gross written premium (GWP). The market remains dominated by the top five insurers accounting for 68.8% share in 2020, in terms of net written premium (NWP).
TAL Dai-ichi Life Australia was the largest insurer with a share of 22.8% in 2020, while Westpac life insurance ranked sixth with a share of 8.1%. Following the acquisition, TAL Dai-ichi is expected to hold combined market share of 30.9%.
Manisha Varma, Insurance Analyst at GlobalData, comments: “The imposition of stringent capital requirements by the Australian Prudential Regulator Authority (APRA) in 2019 prompted major banking groups to disinvest their non-core businesses, including insurance.”
Westpac is the last of the big four banks in the Asia-Pacific region to disinvest their insurance business. Commonwealth Bank of Australia, National Australia Bank and Australia and New Zealand Banking Group have already sold their life insurance businesses in 2017, 2018 and 2019, respectively. In line with other Australian banks, Westpac’s retreat from life insurance business is aimed to focus on its core banking operations.
The sale follows other strategic deals that Westpac has done recently to simplify its product offerings. For instance, on 1 July 2021, Westpac sold its general insurance business to Allianz Australia.
The acquisition of Westpac life insurance by TAL Dai-ichi Life, which is expected to be completed in 2022, will further strengthen Dai-ichi’s position in the Australian insurance industry. In 2019, TAL Dai-ichi completed the acquisition of leading financial services conglomerate Suncorp’s life insurance business, which allowed the insurer to attain top position in the Australian life insurance industry in 2020.
Ms. Varma concludes: “The deal will allow TAL Dai-ichi Life to gain around one-third share of Australia’s growing life insurance industry at a time when domestic market Japan is struggling with a declining population.”