The Westpac (ASX:WBC) share price is higher today after sale update

Westpac has officially agreed to sell its life insurance service for $900 million.

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The Westpac Banking Corp (ASX: WBC) share price is gaining today after the bank announced the sale of its life insurance business.

The bank advised Westpac Life Insurance Services Limited will go to TAL. This is a subsidiary of global life insurance services provider Dai-ichi Life Group.

TAL will pay $900 million for the business. It will also enter a strategic alliance to provide Westpac’s Australian customers with the service for another 20 years.

Right now, the Westpac share price is trading at $25.44. That’s 1.27% higher than its previous closing price.

Let’s take a closer look at today’s news from Westpac.

Westpac opts out of life insurance

Today’s positive Westpac share price movement may be responding to the bank’s confirmation of the life insurance service sale.

According to Westpac, the divestment “releases significant capital”.

Westpac has lost a total of $1.3 billion (post-tax) on the sale. However, it will add around 12 basis points to Westpac’s Level 2 common equity Tier 1 capital ratio. 

The big bank will record a post-tax loss of $300 million for the life insurance business in its financial year 2021 results. The immediate loss mainly relates to transaction and separation costs.  

The remaining loss will the noted when the sale is completed, which is expected to be in late 2022.

Rumours of the sale have been swirling for months now, with TAL tipped as an interested party in June.

Commentary from management

Westpac’s group chief executive specialist businesses and group strategy Jason Yetton welcomed the news, saying:

Life insurance is an important product for many Australians and this sale provides certainty for customers and new opportunities for our people with TAL.

TAL already offers insurance products to more than 4.5 million Australians and is well placed to help Westpac’s customers protect the people they love.

TAL CEO and managing director Brett Clark added:

Both TAL and Westpac share a strong belief in the value of life insurance in the community. Westpac’s ambition is to ‘help Australians succeed’ and TAL looks forward to supporting Westpac and its customers in meeting that ambition by providing high-quality life insurance outcomes for their customers…

We look forward to building a successful partnership with Westpac and remain committed to continuing to deliver the best possible outcomes for all our existing partners, customers and stakeholders.

Westpac share price snapshot

The Westpac share price has had a good run lately.

It is currently 29% higher than it was at the start of 2021. It has also gained 47% since this time last year.

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