OnePath Life will be sold for a total consideration of A$2.85bn (£1.6bn, $2.1bn, €1.8bn), comprising a A$1bn of upfront reinsurance commissions to be paid in May 2018, subject to regulatory approval being granted.
The remaining balance will be paid on completion, which is expected by the end of 2018.
Increasing market share
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 six million customers which are served through the bank’s more than 680 branches and over 2,300 ATMs, as well as digital distribution channels.
Following the transaction, Zurich will have an approximately 19% share of the Australian retail life insurance market, positioning it as the market’s largest retail life insurer, the company said. It will also have around 6% of the group life market.
Zurich said the agreement complements its existing IFA and bank distribution channels in Australia.
Zurich group chief executive Mario Greco said: “ANZ’s portfolio of non-traditional and profitable retail products fits well with Zurich’s strategy to focus on capital-light protection and unit-linked business. Furthermore, it strengthens the group’s position in Asia Pacific, while building on our strong bank distribution capabilities.
“In addition, the existing portfolio provides a highly cash-generative business that will add to our cash remittances, increase our business operating profit after tax return on equity target by 50 basis points and support dividend growth beyond that implied by our existing plan.”
Jack Howell, Zurich’s chief executive for Asia Pacific, added: “Zurich has earmarked the Asia Pacific region to be a major engine of growth in distribution and service capabilities, building on our recent acquisitions of Macquarie’s retail life insurance business and the Cover-More Group. Importantly, we are acquiring a profitable business with loyal customers and a track record of strong, stable cash flows.”