MLC Life’s Japanese parent acts on losses: report
News reports out of Japan have suggested that the challenges faced by MLC Insurance will prompt its major shareholder, Nippon Life, to make a third further injection of capital before the end of this year.
The reports, published by Nikkei, said Nippon was considering the move as the Australian business, still part-owned by National Australia Bank, continued to struggle to deal with the state of the income protection market in Australia as well as the pressures imposed by the COVID-19 pandemic.
The Japanese report noted that after its acquisition of MLC in 2016, Nippon Life had posted an impairment loss and had injected capital of about 20 billion yen ($260 million) in June this year and suggested that the Japanese insurer was “considering a third additional investment by the end of this year to support its cashflow”.
“Nippon has also put together a plan to raise the premiums of income protection insurance, which continues to be loss making, for the fiscal year ending March 2020. MLC seeks to return to making profit from a 10.8 billion yen loss. The company will also aim to reduce expenses by more than 20%,” the report said.
It said Nippon had clearly stated that “it will be strongly involved in the restructuring of MLC, which is the core of its overseas business”, noting that a new department was established to manage MLC's operations, and a number of executives were dispatched to Australia. The department will focus on rebuilding corporate governance.
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