TAL takes 15% stake in Challenger

On Monday, Australian life insurer TAL announced that it has agreed to acquire a total relevant interest of 15.1 per cent in Challenger Limited, pending regulatory approvals.

TAL Dai-ichi Life Australia, which is the local subsidiary of Dai-ichi Life Holdings, will acquire the stake in Challenger from another Japanese firm, MS&AD Insurance Group Holdings, at a price of approximately $8.46 per share.

This, Challenger said in an ASX release, represents a premium of 53 per cent to its closing share price on 4 April.

TAL said it recognises the evolving needs of Australia’s ageing population and a shareholding in Challenger adds to TAL’s “long-term commitment to the growing retirement sector”.

“There is an important community need to address with five 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,” Fiona Macgregor, chief executive of TAL, said.

Nick Hamilton, managing director and chief executive of Challenger, said the business looks forward to “building a relationship that will benefit both our customers and shareholders”.

“We welcome their significant investment in our business and will explore future opportunities that support our strategic objectives,” Hamilton said.

“The strategic reinsurance relationship in place with MS Primary since 2016 has created significant shared value and we are pleased this will continue. This is an exciting time for Challenger as we deliver our growth strategy and provide financial confidence to even more Australians in retirement.”

Last year, Challenger and Mitsui Sumitomo Primary Life Insurance Company Limited (MS Primary), a subsidiary of MS&AD, renewed their reinsurance partnership for a further five years. Challenger added that it has “successfully collaborated” with MS Primary over the last decade and the partnership “will not be impacted by the share sale”.

Following the completion of the sale of MS&AD's equity holding in Challenger, Masahiko Kobayashi will accordingly step down as MS&AD’s representative on the Challenger board.

The share sale is subject to customary regulatory approvals, including from the Australian Foreign Investment Review Board and the Australian Prudential Regulation Authority.