The bank announced the sale this morning via the ASX, along with the NAB's full-year profit of $6.34 billion (up 19.7 per cent on last year).
The sale will see the Japanese insurer purchase the life insurance business for $2.4 billion, while NAB will retain 20 per cent of the business.
NAB will retain ownership of its existing investments business which includes superannuation, platforms, advice and wealth management.
According to NAB, the economic risks and benefits of 80 per cent ownership will pass to Nippon Life from 28 October 2015.
NAB will retain responsibility for the management of the life insurance business until the completion of the sale.
The transaction is expected to be completed by the second half of calendar 2016 subject to regulatory approvals, establishment of the life insurance business as a standalone entity and extraction of the superannuation business from MLC.
According to NAB, the sale price implies a financial year 2015 implied price/earnings ratio of 19 times for the 80 per cent stake, based on pro forma earnings of around $160 million.
NAB will retain the MLC brand, although it will be licensed for use by the life insurance business for 10 years.
The transaction is expected to result in a indicative loss on sale of approximately $1.1 billion inclusive of transaction and separation costs.
NAB's pro forma financial year 2015 common equity tier one ratio is expected to increase by 50 basis points as a result of the sale, said the bank.
One-off post-tax costs of $440 million are expected to be incurred by NAB as a result of the separation of the life business, as well as the extraction and simplification of the superannuation business.
