National Australia Bank (NAB) has entered into an agreement with a large unnamed international insurer for just over a fifth of its in-force retail insurance book, with the deal approved by the Australian Prudential Regulatory Authority (APRA).
The deal will release around $500 million of NAB’s capital, dropping exposure to retail life insurance but still maintaining product distribution, expected to be completed by the end of this financial year. This arrangement is representative of around 15 per cent of NAB Wealth’s life insurance embedded value, set to reduce the cash earnings by about $25 million.
In other NAB news, a $5.5 billion capital raising is underway to divest its UK banking business. A statement released by NAB said, ‘It is a priority to exit this business, and we are today announcing our intention to pursue a demerger and Initial Public Offering of the UK Banking business.’