NAB has sold 80% of MLC’s life insurance business to Nippon Life for $2.4 billion and agreed to continue distributing product for the next 20 years.

Excluded from the deal are MLC’s super, platform, adviser dealer group and asset management businesses.

The MLC brand will be retained by NAB for 10 years and it will continue to manage the life business until the transaction is completed in the second half of next year.

Removing the life operation from MLC will involve creating a standalone business that will require regulatory approval. This is expected to cost NAB about $440 million and is included in the $1.1 billion loss the bank is expected to book on the sale. This is based on MLC life assets of $3.6 billion and $1.6 billion of goodwill.

MLC Executive Director David Hackett will be appointed CEO of MLC Life after the takeover, and Nippon Life personnel will be named as directors.

Nippon Life says it has a three-year plan to grow through overseas insurance acquisitions.

It was attracted by the Australian market’s potential high growth rates in the long term, especially in group life.

It plans to strengthen MLC’s competiveness through product development, stronger underwriting and operational efficiency.

“Nippon Life believes MLC Life’s continued growth can be achieved by expanding bancassurance and cross-selling opportunities to existing bank customers, particularly with NAB’s continuing support,” the life insurer said.

NAB Group CEO Andrew Thorburn says improved results in the wealth business, which includes MLC, enabled the bank to strike a deal with Nippon Life.

“This partnership will enable us to continue to deliver insurance solutions to our customers while improving NAB Wealth returns for shareholders,” he said.

“Wealth products remain important to our business, which is why we are also announcing an additional investment of at least $300 million in NAB Wealth during the next four years.”

At September 30 MLC had 1.4 million inforce policies and premium of $1.8 billion.