Australian lender Westpac is planning to offload its life insurance operations after the bank received interest from potential suitors.
Two sources familiar with the development told Reuters that Australia’s second-largest bank has not taken a final call on the deal and the talks have just started.
Instead of completely divesting its life insurance operations, Westpac would prefer to collaborate with the potential bidder, the first source told the publication.
The proposed life insurance unit is expected to have a valuation of approximately A$2bn ($1.35bn).
Insurance major American International Group (AIG) has reportedly expressed interest in the business of Westpac and had negotiations with the bank, the Australian newspaper reported recently.
By the end of 30 June 2019, Westpac had A$6.9bn in life insurance liabilities. The annual revenue of the business stood at A$988m, as per the data available at Australian Prudential Regulation Authority (APRA).
Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ) have already divested majority stakes in their life insurance businesses.
Zurich Insurance agreed to acquire ANZ’s life insurance business in a transaction valued at around A$2.85bn in December 2017.
After that, Hong Kong-based AIA Group snapped up CBA’s life insurance unit.
Japanese insurer Nippon Life bought an 80% stake in NAB’s life insurance business for A$2.4bn in 2015.