News: SUN UPDATE 1-Australia's Suncorp Group to sell life insurance unit, FY profit dips

(Adds details on life insurance division sale, background, dividend)

Aug 9 (Reuters) - Australia's second largest general insurer Suncorp Group Ltd (SUN) said on Thursday it would sell its life insurance division to a unit of Japan's Dai-Ichi Life Holdings 8750.T for A$725 million ($538.82 million) and reported a 1.5 percent drop in annual profit.

The deal ends more than a year of speculation over a sale it had considered since early 2017.

Suncorp will record a one-off non-cash loss of about A$880 million in its fiscal 2019 on account of the sale, the company said in a statement.

Suncorp, which has the brands AAMI and GIO, said the agreement included a 20-year strategic alliance with TAL Dai-ichi Life Australia Pty Ltd to offer life insurance products through the company’s Australian distribution channels.

Goldman Sachs analysts had estimated the unit's worth at about A$1.5 billion.

The sale sees the insurer joining companies like Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd (NAB) , which have exited the life insurance business to cut exposure to shrinking margins and offshore competition.

The insurer's net profit fell to A$1.06 billion for the year ended June 30, from A$1.08 billion a year ago, due to rising costs.

Revenue dipped 11.2 percent to A$15.45 billion. Suncorp announced a final dividend of 40 cents per share and a special dividend of 8 cents per share.