NAB sells MLC risk business

National Australia Bank (NAB) has sold 80% of its MLC life insurance business to Japanese insurer Nippon Life for $2.4 billion.

NAB will retain ownership of its superannuation, platforms, advice and asset management businesses.

It will also retain the MLC brand, although it will be licensed for use by the life insurance business for 10 years.

The buyout is expected to be completed by the second half of 2016, although it is subject to certain conditions, including regulatory approval and the establishment of the MLC insurance business as a standalone entity.

This entails the extraction of the superannuation, advice, asset management and platforms businesses from the current structure.

“This partnership will enable us to continue to deliver insurance solutions to our customers while improving wealth returns for shareholders,” NAB Group chief executive Andrew Thorburn said.

Plan for Life report of life insurance premium inflows and sales for the year to June 2015 shows that MLC had 12.1% market share of premium, 1% down from June 2013.

MLC is Australia’s fifth largest insurer by market share (12.1%) and is behind TAL, AIA, AMP and CommInsure.

Rainmaker research shows that MLC is not among Australia’s top insurers in the superannuation space by members served.

MLC is ninth in the list of top superannuation insurers and it serves less than one million members, most of which are from retail funds.

The list is topped by AIA and followed by TAL, OnePath, CommInsure and AMP.

As part of the bank’s annual results, Thorburn announced a $300 million investment in NAB Wealth over the next four years.

“This will allow us to deliver a great customer experience while driving a closer relationship between our banking and wealth businesses,” Thorburn said.

During the year to September 30, 2015, NAB Wealth’s cash earnings increased 27% to $464 million and net income rose 10%, reflecting higher insurance premium pricing, improved insurance lapses and claims, and non-recurrence of insurance reserve strengthening in the previous year.

Funds under management rose 8%, with strong investment markets and the acquisition of Orchard Street Investment Management in the March 2015 half year.

This increase was offset by lower investment earnings on retained earnings and lower investment margins due to MySuper transitions.

[via Financial Standard]