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Suncorp selling Australian life business to TAL Dai-ichi Life for A$725M

Suncorp Group Ltd. signed a nonbinding heads of agreement to sell its Australian life insurance business to TAL Dai-ichi Life Australia Pty. Ltd. for approximately A$725 million.

The proposed transaction is structured as a sale of 100% of the shares in Suncorp Life & Superannuation Ltd., which includes Suncorp's Australian life risk and participating, annuities and unit-linked wealth business but excludes the Australian Wealth Suncorp Portfolio Services Ltd. superannuation business.

The legally binding sale documentation is expected to be executed by the end of August. The transaction is expected to be completed by Dec. 31, subject to certain conditions and regulatory approvals in Australia and Japan.

Allowing for separation and transaction costs, provisions and hybrid capital, Suncorp anticipates returning approximately A$600 million to shareholders following the completion.

If the deal closes by Dec. 31, it is expected to be marginally accretive to cash return on equity in full year 2019. Suncorp is aiming for a cash return on equity of 10% for full year 2019, excluding the positive impact of the divestment.

The transaction is expected to result in an after tax noncash loss on sale in full year 2019 of approximately A$880 million.

The two companies will also enter into a 20-year strategic alliance under which TAL Dai-ichi Life will offer life insurance solutions through Suncorp's Australian distribution channels.

The transaction marks the completion of Suncorp's strategic review of its Australian life insurance business.