NAB venture plans to be Australia’s biggest insurer

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Bloomberg By Gareth Allan and Komaki Ito

National Australia Bank Ltd. and Nippon Life Insurance Co.’s venture intends to be the largest writer of life insurance premiums in Australia.

The two companies want to “build the number one life insurer in Australia” to overtake market leader AMP Ltd. in gross premiums written, Chief Executive Officer Andrew Thorburn said in an interview in Tokyo Sunday, without giving a specific timeframe.

“We’ve got a mutual, common interest in this venture succeeding,” Thorburn said. “Nippon are going to bring world- class excellence in product innovation in life insurance, which means our clients are going to get continual upgrades from the best.”

National Australia said last month it agreed to sell 80 percent of its life insurance unit to Nippon Life Insurance Co. for A$2.4 billion ($1.7 billion) as part of Thorburn’s strategy to exit underperforming units and lift measures such as return on equity and margins that have lagged behind peers. The unit has a 14 percent market share as of June 2015, second to leader AMP with 19 percent, according to data from Australian industry researcher Plan for Life on Nippon Life’s website.

The proportion of life insurance to gross domestic product was 8.6 percent in Japan in 2014, according to calculations by Bloomberg based on Swiss Re AG data. That compares to 3.8 percent in Australia. Thorburn said this give the companies room to increase penetration by coupling the product development expertise of Nippon Life with National Australia’s distribution network.

Thorburn stressed the value of common business values between the companies.“Despite the language and cultural differences, we have the ability through trust to be able to talk quickly about issues,” he said. “And you can’t buy that.”