SYDNEY Dec 12 Australia's MLC Life Insurance
plans to push into the group life insurance market and make its
pricing more competitive now that it is more independent from
shareholder National Australia Bank Ltd (NAB), its
chief executive said.
NAB sold 80 percent of MLC Ltd, operator of the country's
fourth-largest life insurer, to Japan's Nippon Life Insurance Co
for A$2.4 billion ($1.79 billion) in a deal that closed in
The sale came as banks re-focus on businesses generating
higher returns and on building capital needed to meet regulatory
requirements. Last month, Australia and New Zealand Banking
Group Ltd said it was considering selling its A$4.5
billion life and wealth insurance division.
In a phone interview with Reuters, MLC Life Insurance CEO
David Hackett said the switch from being a bank-owned insurer to
a standalone business with a lower cost of capital had resulted
in a change in strategy.
NAB, like its banking rivals, has a large retirement fund
business that competes against not-for-profit industry funds.
Now MLC Life is run separately from NAB and has a more
independent board, it can push to secure industry funds as group
life insurance clients, Hackett said.
"We are being welcomed in by the industry funds as a
credible alternative," he said. "It is a great opportunity for
us to become a much stronger player in that market and provide
more choice to the funds."
Hackett said Nippon Life's aspirations for MLC Life include
overtaking AMP Ltd to become Australia's third-largest
life insurer, which he said could occur next year based on
current growth trends.
"The hurdle rates that we'll be looking to achieve in the
business are now I think going to be more competitive and will
give us more competitive pricing than we could achieve as NAB,"
Market leader TAL Life Ltd, owned by Japan's Dai-ichi Life
Holdings Inc, commands 17 percent of Australia's life
insurance market, followed by Hong Kong's AIA Group Ltd
with 13 percent. AMP and MLC Life each hold around 12
($1 = 1.3417 Australian dollars)
(Reporting by Jamie Freed; Editing by Christopher Cushing)