National Australia Bank (NAB) is reportedly conversing with global financial service companies about potential partnerships in order to free up some of the capital invested in its poorly performing life insurance division.
NAB has spoken to a number of offshore companies over the past few months in response to its plummeting insurance profits, which dropped 82% last year, reported Australian Financial Review.
This comes after the shock announcement by CEO Cameron Clyne that he will be retiring in August due to the toll the job has taken on his personal life.
The reports that the bank is looking towards a partnership are based on unnamed sources.
Last week banks analyst Brian Johnson of CSLA described the pressured life insurance unit (which sits inside MLC) as “shareholder-value destructive” in a note to clients.
NAB is unlikely to dispose of the life business completely due to the rock-bottom price it may have to accept and the potential impact it could have on its relationships with its customers, the article said.
One solution could be to increase its life reinsurance arrangements in a move that would echo that of Suncorp, which last year secured a reinsurance deal that reduced the life division’s capital requirements.
But if the bank did decide to discharge the insurance division as a whole, AIA and Allianz have both been touted as potential buyers, the report said.
contacted NAB about the reports but policy does not allow it to comment on market speculation.