TAL Australia will purchase Suncorp’s Australian life insurance business after the two groups announced they had entered into a Heads of Agreement to proceed with the transaction.
TAL stated the deal would cost approximately $640 million plus adjusted net worth on completion with Suncorp telling its shareholders the total cost would be approximately $725 million.
The two groups have yet to complete legally binding sale agreements but in an announcement to the ASX, Suncorp noted this was expected to be completed by the end of the month.
Suncorp also stated it expected the transaction to be completed by 31 December 2018, subject to the satisfaction of conditions and approvals in Australia and Japan.
TAL added that it would maintain the Asteron brand after the completion of the transaction stating it “…looks forward to enhancing the already strong existing Asteron relationships with IFAs, Dealer Groups and Institutional APLs and Platforms”.
“We know that Asteron has a long history and a great understanding of the adviser insurance market and we’re excited about having more depth and expertise to provide the best possible service to advisers and their clients,” TAL stated.
“This acquisition will enhance TAL’s scale and capability across the retail, group and direct segments…”
As part of the transaction, TAL would also sign a 20-year strategic alliance agreement for the sale of life insurance products through Suncorp’s distribution network, including its digital channels, contact centres and store network.
According to its statement to the ASX, Suncorp would also continue to earn income in the distribution of life insurance through this agreement.
Suncorp Chief Executive & Managing Director, Michael Cameron said the transaction brought to an end a strategic review of Suncorp’s Australian life insurance business which included consideration of additional reinsurance, partnership arrangements and divestment.
Cameron added the sale of the life company was the superior option and would simplify Suncorp’s business model and would provide a significant release of capital to shareholders. The sale, however, would have no impact on the Suncorp life insurance business in New Zealand and excludes the Australian Wealth Suncorp Portfolio Services Limited superannuation business.
TAL Group Chief Executive and Managing Director, Brett Clark, said the Suncorp Group was one of Australia’s largest financial services businesses and the transaction would significantly expand TAL’s market presence in Australia and provide new opportunities with trusted brands, and a broader group of financial advisers.
“This acquisition will enhance TAL’s scale and capability across the retail, group and direct segments, and will open up important new distribution channels. It will provide us with a strong base for continued growth and reflects our ongoing commitment to offering Australians a range of life insurance options to meet their diverse needs,” Clark said.
“We look forward to building a successful partnership with Suncorp. Of course, we remain committed to our existing partners and customers, and will be focused on ensuring that we continue to deliver the best possible outcomes for all our partners and stakeholders,” he added.