TAL Dai-ichi will acquire Suncorp’s Australian life insurance business for about $725 million, in a deal that includes a 20-year distribution alliance.

The transaction will see TAL offer life cover through Suncorp sales channels, including its store network, contact centres and digital platforms.

“We look forward to extending our life insurance expertise to provide high-quality… solutions to Suncorp customers and distribution partners,” TAL Group CEO Brett Clark said.

Suncorp, which announced early last year it was reviewing options for the life division, says the sale will simplify its business model, release capital to shareholders and be marginally accretive to cash return on equity this year.

As reported by insuranceNEWS.com.au in a Breaking News bulletin last week, the group has flagged a $600 million capital return to shareholders, with details to be determined after the sales agreement is finalised and before completion, expected by the end of December.

Suncorp will book a non-cash writedown to goodwill and net assets of about $880 million this financial year.

The Australian life business reported an underlying profit of $76 million for the year to June 30, up 43.4% on the previous year.

Net profit after tax grew 70.6% to $58 million, including the impact of market adjustments for policy discount rate changes and investments.

Suncorp CEO Michael Cameron says the company is not planning to sell its New Zealand life operations.

“In New Zealand we will continue to manufacture those products and services ourselves,” he said.

“We have a very robust business there. It generates great outcomes for our customers. It is growing and it delivered a very solid return on equity from a shareholder perspective.”

The business, which includes Asteron Life and the AA Life joint venture with the New Zealand Automobile Association, recorded net profit of $NZ39 million ($35 million) last financial year, down $NZ1 million ($908,000) on the previous year due to lapse and claims volatility.

Suncorp New Zealand CEO Paul Smeaton says further inforce premium growth is expected after a 4.9% gain last year, while underlying profit is also expected to increase.