Westpac has agreed to sell its New Zealand life insurance arm for $NZ400 million ($374 million) to Fidelity Life Assurance Company, the bank announced today in a statement.

Fidelity is the largest locally owned life insurer in New Zealand and is backed by cornerstone investor NZ Super Fund.

Westpac says it will also enter into a 15-year exclusive agreement with Fidelity to distribute life insurance products to the bank’s customers. In return Westpac will receive ongoing payments for the distribution arrangement as part of the terms of the sale agreement.

The bank expects to book a post-tax gain from the sale of the life business, which had annual in-force premiums of $NZ149 million ($139 million) as at March 31, the statement said.

The agreement to sell the life business follows the completion of the sale of its Australian general insurance arm last week to Allianz for $725 million. Since May last year, the lender has been undertaking a strategic review of its non-banking operations.

CEO Peter King says the sale of Westpac Life NZ is part of the bank’s ongoing program to simplify its business portfolio.

“This transaction is the latest step in simplifying our business while continuing to help customers with their life insurance needs,” Mr King said.

“Life insurance products are important for many New Zealanders and we are pleased to be entering a long-term partnership with a life insurance specialist to continue to help our customers protect themselves and their loved ones.”

Westpac says the sale is expected to complete by the end of the year, subject to regulatory approvals.