National Australia Bank (NAB) has received approval from APRA for its life insurance arm to enter into a reinsurance arrangement with a major reinsurer.
In an announcement to the ASX today, NAB said the prudential regulator has approved the bank to enter a deal with a global reinsurer for approximately 21 per cent of its in-force retail advised insurance book.
NAB added the transaction is expected to release approximately 15 per cent of NAB Wealth’s life insurance embedded value.
“The transaction is expected to release approximately $500 million of CET1 capital (13 basis points) to the NAB Group,” a statement from NAB said.
“This is expected to result in a reduction in NAB Wealth cash earnings of approximately $25 million per annum.
“The reinsurance arrangement reduces the group’s exposure to retail life insurance while maintaining distribution of life insurance products and services to the group’s customers.
"The transaction is scheduled to take effect in the fourth quarter of financial year 2015. The final capital release is subject to APRA approval,” it said.
More to come.