Westpac Bank has sold its New Zealand life insurance business to local insurer Fidelity Life for $400 million.
Photo: RNZ / Nate McKinnon
As part of the deal, Westpac would refer any potential life insurance customers to the company for the next 15 years.
Fidelity Life's largest shareholder, the NZ Super Fund, would co-fund the acquisition with its new investor Ngāi Tahu Holdings, which was contributing $140m.
Westpac acting chief executive Simon Power said Fidelity Life were leaders in the industry.
"In talking to Fidelity Life we were extremely impressed with their single-minded focus on their customers," he said.
"Westpac Life customers do not need to take any action. Nothing changes with their policies and we know they'll be in great hands with Fidelity Life."
Fidelity Life chief executive Melissa Cantell said its alliance with Westpac NZ would deliver positive outcomes for its customers.
"The partnership will also allow us to leverage the investments we're already making in our customer experience, data and technology, as well as our strong New Zealand brand, to make the transition a smooth one for Westpac Life customers and team members."
Cantell said Fidelity Life had been in talks with Ngāi Tahu Holdings for several months about it joining the company as an investor, and this was an opportunity that came to fruition.
"We're thrilled to have them come on board as a cornerstone stake holder," she said.
Westpac is the latest bank to exit the life insurance industry, after BNZ sold its insurance arm to Partners Life last year.
BNZ's parent, National Australian Bank, sold its insurer, MLC, four years ago to Nippon Life, and the Commonwealth Bank, which owns ASB, ANZ, and AMP, has sold all insurance operations.
The Reserve Bank (RBNZ) is reviewing the financial solvency rules covering the insurance industry, which has seen many banks exist the sector to focus on their core business.
In 2019, the RBNZ and the Financial Markets Authority criticised the life insurance industry for being too slow to change their culture and conduct.