Life insurer TAL has agreed to buy MS&AD Insurance Group Holdings’ 15.1% stake in listed Australian wealth group Challenger for ¥80 billion ($909.28 million).

The deal, announced this morning, is subject to regulatory approvals, including from Australia’s Foreign Investment Review Board and the Australian Prudential Regulation Authority.

TAL is a wholly owned subsidiary of Japan’s Dai-ichi Life Group. The investment in Challenger comes months after another Japanese insurer, Nippon Life, moved to buy Resolution Life Australasia.

Dai-ichi Life Group said: “TAL recognises the evolving needs of Australia’s retirement market, and the minority investment in Challenger reflects TAL’s long-term commitment to the retirement income solutions sector, where we expect to benefit from the anticipated market growth.”

TAL CEO Fiona Macgregor added: “There is an important community need to address with 5 million Australians currently in or preparing for retirement. Our minority investment in Challenger is an extension of our commitment to supporting Australians’ financial needs during retirement.”

Challenger reported a 12% rise in normalised net profit after tax to $225 million for the six months to December, lifted by its life and retail lifetime annuity businesses.

MD and CEO Nick Hamilton says the business looks forward to “building a relationship that will benefit both our customers and shareholders. We welcome [the] significant investment in our business and will explore future opportunities that support our strategic objectives.”

He says Challenger’s reinsurance partnership with MS&AD Insurance Group subsidiary MS Primary will continue after the 15.1% stake is sold to TAL.

That partnership, in place since 2016, was renewed last year for another five years.