In 2011, according to APRA statistics, MLC held net assets of almost $2.6 billion, with net policy revenue of $1.6 billion. In October 2015, NAB sold 80% of MLC to Nippon Life, for $2.4 billion, giving a total indicative valuation of around $3 billion. NAB advised that the sale price represented a price/earnings ratio of 19 and for NAB will represent an indicative loss of $1.1 billion.
This will represent the second Japanese giant in the Australian life insurance business, with Dai-ichi Life successfully acquiring 100% ownership of TOWER Australia in 2011 (and changing its name to TAL).
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In announcing the sale to the ASX, NAB CEO Andrew Thorbun described the sale as enabling the company to build its balance sheet and exit legacy and lower-returning assets.
“Our Wealth business has delivered significantly improved results since 2013 which has enabled us to secure the long-term partnership … with Nippon Life, one of the world’s leading life insurers. Nippon Life will acquire 80% of NAB’s life insurance business, while NAB will retain the remaining 20%.”
NAB advised that it will retain ownership of its investments business which includes superannuation, platforms, advice and assets management. These businesses will be extracted from MLC and restructured, and will also receive a fresh investment of at least $300 million.