National Australia Bank yesterday called a trading halt to its shares on the ASX and confirmed a widely circulated rumour: it is selling 80 per cent of its MLC life insurance business to Japanese insurance giant Nippon Life for A$2.5 billion. NAB will retain its superannuation and wealth advice business. The deal, while freeing up capital and cutting loose a non-core business, will nevertheless entail a loss of goodwill of around A$1.1 billion. The loss is expected to be reported in non-cash earnings, based on expected completion net asset value of $3.6 billion on deconsolidation for the sale of NAB's Life Insurance business and after allowing for estimated transactions costs. NAB will retain a 20 per cent stake in the newly renamed MLC Life, and the sale agreement includes a 20-year distribution deal with MLC Life. NAB expects to complete the sale of the 80 per cent stake in the life insurance business in October 2016, subject to regulatory approvals. The life insurance operations are relatively capital intensive and have low returns.  NAB's current life insurance business consists of NAB's life insurance activities managed through MLC Limited with $1.8 billion of premiums in force and approximately 1,000 employees. NAB will also incur $440 million in after-tax one-off separation costs. In a presentation to investors at the time the sale was announced, NAB said the sale price had an expected completion date in the second half of calendar 2016, "subject to regulatory approval" and other aspects proceeding smoothly. It will involve establishment of MLC Life as a standalone entity and extraction of the superannuation business from MLC. As a consequence of this extraction, the superannuation fund business (which consists of eight existing super funds and three administrators) will be simplified and rationalised. The sale follows another "capital release" by NAB via the $0.5 billion reinsurance transaction announced in May 2015.  Fitch Ratings was positive on the news, which was combined with an announcement that NAB would demerge its UK operation through an initial public offering of its UK subsidiary, Clydesdale Bank, in February 2016. "Exiting the non-core businesses should free up management time, allowing the group to make better use of its strong banking franchise in both Australia and New Zealand," Fitch said in a note to clients. According to the Fitch Ratings note, NAB's pro-forma common equity Tier 1 ratio at 30 September 2015 was 9.4 per cent, after taking into account these actions, as well as factoring in higher average mortgage-risk weights, which come into force on 1 July 2016.