Suncorp confirms sale of life insurance arm delivering bulk shareholder returns
4 September 2018, Written by David Simmons
Suncorp's (ASX: SUN) $725 million sale of its life insurance arm to Japanese insurance group Dai-ichi Life is set to deliver windfall returns for shareholders.
The sale, announced in early August alongside its FY18 results, is set to deliver approximately $600 million to shareholders according to Suncorp.
The sale to Dai-ichi's Australian subsidiary TAL Dai-ichi Life Australia (TAL) includes a 20-year distribution agreement with TAL to offer life insurance solutions through Suncorp's Australian distribution channels.
Under the terms of the deal, Suncorp will continue to earn income on the distribution of life insurance.
Completion of the transaction is expected to occur by 31 December 2018, subject to the satisfaction of certain conditions and regulatory approvals in Australia and Japan.
In August, the company announced its full year results, which saw the company's full year profits drop 1.5 per cent to $1.06 billion.
Suncorp's cash earnings also took a dive, down 4.1 per cent from $1.14 billion in FY17 to $1.09 billion this year.
The company was one of the many financial institutions that took a grilling at the royal commission into the financial services industry, though it is not clear if the business was materially hit by the results of the commission.
Ultimately, the second half of the year was buoyed by how tough the business had it in the first half. Suncorp's first half results took a pummelling from the unanticipated amount of damage from a variety of natural disasters, including the Melbourne hailstorm event, which saw Suncorp's first half profit drop 15.8 per cent to $452 million.
The future seems bright for the insurance giant, which will soon settle into a new $800 million tower in Brisbane as part of a lease agreement which has been dubbed Brisbane's largest in a decade.
Business News Australia
Author: David Simmons