Australia's life insurance industry is facing deteriorating profitability in relation to income protection products, according to MLC Life Insurance owner Nippon Life.
The Japan-based majority shareholder of MLC Life purchased the business off National Australia Bank in 2015, though the two parties are currently disputing the terms of the sale.
In a submission to the Tokyo Stock Exchange, Nippon Life said together with NAB, it has resolved to subscribe for further shares in MLC.
Nippon said deteriorating conditions in the Australian life insurance industry are to blame for the challenges facing MLC.
"A lengthening of claim durations and increased payments are some of the contributing factors," Nippon said.
"In these circumstances, in conjunction with MLC Life Insurance reviewing its business plan, starting with amending its income protection insurance policies and improving business efficiencies, the company has decided to subscribe for further capital with a view to strengthening MLC Life Insurance's profitability and sustainability."
Nippon Life purchased 80% of the 224.2 million shares issued, with NAB picking up the remainder, totaling around $290 million (JPY 22 billion).
MLC Life is the most recent acquisition by Nippon Life, which has 18 consolidated subsidiaries in its business, with the majority based in the US and Japan.
MLC Life brings in around $1.9 billion in insurance premiums each year, with around $5.8 billion in total gross assets, as of 31 December 2018.
In May, Financial Standard reported NAB and Nippon Life were having trouble seeing eye to eye on whether MLC should be spun out as a standalone entity. The disagreement stemmed from disputing contractual obligations.