Zurich to buy ANZ's Australian life insurance unit for about $2.14 billion
Staff Writer |
Zurich Insurance Group announced that it has entered into an agreement to acquire 100 percent of ANZ’s life insurance businesses, OnePath Life, in Australia for AUD 2.85 billion ($2.14 billion).
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Both parties expect the transaction, which is subject to regulatory approval, to be completed by the end of 2018.
The transaction price comprises AUD 1 billion of upfront reinsurance commissions, expected to be paid subject to regulatory approval in May 2018 with the remaining balance paid on completion.
The acquisition is expected to contribute to the Group’s profitability from day one, generating strong cash flows which will support future dividend growth.
The transaction will also increase the proportion of stable life protection-based earnings, reducing overall Group earnings volatility and increasing the proportion of life earnings remitted as cash back to the Group. In view of these earnings benefits, Zurich expects to raise its current BOPAT ROE target by 50 basis points by 2019.
The transaction is also expected to increase the level of overall cash remittances over the 2017-2019 planning period by AUD 300 million ($225 million).
As part of the transaction, Zurich will enter into a 20-year distribution agreement with ANZ in Australia to distribute life insurance products through bank channels.
Under this agreement, Zurich will have access to ANZ’s 6 million customers which are served through the bank’s more than 680 branches and over 2,300 ATMs, as well as digital distribution channels.
As a result of the transaction, Zurich will have an approximately 19 percent share of the Australian retail life insurance market, positioning it as the market’s largest retail life insurer.
It will also have around 6 percent of the group life market. The agreement complements Zurich’s existing independent financial adviser (IFA) and bank distribution channels in Australia. ■