Reflecting the level of challenge facing many of Australia’s major life insurers, MLC Life required a capital injection of $650 million from its major stakeholders just ahead of the Christmas shutdown last year.
MLC Life confirmed that it had received a combined capital injection of $650 million from Nippon Life and National Australia Bank.
Commenting on the move, MLC Life chief executive, Rodney Cook, said the significant capital injection would set the business up for future success “beyond just provisioning for the impacts of COVID-19”.
He said the injection demonstrated “the emphatic support of our shareholders and their backing of our strategic direction.
“It sets us up to survive and thrive in the coming post-pandemic environment,” Cook said. “It provides real security of policyholder benefits, meaning we will continue to deliver on the promises we make to our customers and business partners.
“As a member of the Nippon Life Group of Companies, we benefit from its long-term view. This additional capital also supports our strategic goals.”
Cook said those strategic goals included playing a larger role in the group insurance market, developing the industry’s leading claims function, and making it more efficient for advisers and superannuation funds to provide insurance to their customers through the use of technology.
In a formal announcement issued by Nippon Life ahead of the Australian announcement, the Japanese insurer said it would “work closely with MLC Life Insurance, carefully monitor developments and continue to extend its support to the business”.
It noted that the additional capital was divided into two parts: An AUD $530 million ordinary equity issue to be contributed by Nippon Life and NAB (in line with their current ownership interest of 80% and 20% respectively) and Tier 2 capital notes of AUD $120 million to be subscribed to by Nippon Life.