Westpac has raised just on $1.1 billion from the sale of its Australian and NZ general insurance businesses as the big four bank continues a financial slimming campaign.
Westpac said on Tuesday it had agreed with Fidelity Life Assurance Company to sell Westpac Life-NZ- Limited and enter into an exclusive 15-year agreement for the distribution of life insurance products to Westpac’s New Zealand customers.
Westpac said the sale price of $NZ400 million (approximately $A373 million) is expected to result in a post-tax gain on sale and add approximately 7 basis points to Westpac Group’s common equity tier 1 capital ratio.
Westpac shares eased 0.3% to $24.42. The money raised from the sales will go to improve the bank’s capital buffers.
The transaction will also include ongoing payments from the distribution agreement to Westpac New Zealand Limited.
Westpac last week completed the sale of its Australian general insurance business to Allianz of Germany for $725 million, plus future payments ($25 million subject to certain milestones being reached).
Fidelity Life Assurance Company Limited is New Zealand’s largest locally owned life insurer, backed by cornerstone investor the NZ Super Fund.
Westpac Chief Executive Officer, Peter King, said the sale was a further milestone in building a simpler bank. “This transaction is the latest step in simplifying our business while continuing to help customers with their life insurance needs.
“Life insurance products are important for many New Zealanders and we are pleased to be entering a long-term partnership with a life insurance specialist to continue to help our customers protect themselves and their loved ones,” Mr King said.
Westpac Life-NZ- Limited is part of Westpac’s New Zealand operations. At March 31 this year, the business had annual in force premiums of $NZ$149 million ($A139m).