National Australia Bank Ltd and Nippon Life Insurance Co’s venture intends to be the largest writer of life insurance premiums in Australia.
The two companies want to “build the number one life insurer in Australia” to overtake market leader AMP Ltd in gross premiums written, chief executive officer Andrew Thorburn said in an interview in Tokyo yesterday, without giving a specific time frame.
“We’ve got a mutual, common interest in this venture succeeding,” Thorburn said. “Nippon is going to bring world-class excellence in product innovation in life insurance, which means our clients are going to get continual upgrades from the best.”
National Australia said last month it agreed to sell 80 percent of its life insurance unit to Nippon Life Insurance Co for A$2.4 billion (US$1.7 billion) as part of Thorburn’s strategy to exit underperforming units and lift measures such as return on equity and margins that have lagged behind peers.
The unit has a 14 percent market share as of June, second to leader AMP with 19 percent, according to data from Australian industry researcher Plan for Life on Nippon Life’s Web site.
The proportion of life insurance to GDP was 8.6 percent in Japan last year, according to calculations by Bloomberg based on Swiss Re AG data. That compares to 3.8 percent in Australia.
Thorburn said this give the companies room to increase penetration by coupling the product development expertise of Nippon Life with National Australia’s distribution network.
Thorburn said it was important to have common business values between the companies.“Despite the language and cultural differences, we have the ability through trust to be able to talk quickly about issues,” he said. “And you can’t buy that.”
National Australia Bank’s stocks rallied 8.6 percent over the past week, outperforming ASX200, which has risen 5.1 percent from its monthly low of 4,997.9 points.
The increase followed a yearly decline of as much as 25 percent in the stocks of the nations four largest banks, prompting analysts to suggest that the sector has bottomed out.
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