The transaction is subject to regulatory and court approvals, and is expected to be completed in the second half of the 2016. Macquarie Life’s Australian based staff will transfer to Zurich as part of the deal.
“The sale of the business reflects the need for significant scale in the capital intensive life insurance industry in order to drive appropriate returns,” said Greg Ward, head of Macquarie’s Banking and Financial Services division.
Scale enhancement
Tim Bailey, chief executive of Zurich’s Life and Investments business in Australia said: “The acquisition is consistent with our long term strategic intent in terms of our Australian market presence and our overall proposition as an innovative, customer-focussed life insurer.
“The acquisition will enhance both our scale and overall capability and will allow us to further strengthen the proposition which has been a key driver of our recent growth trajectory,” he said.
As part of a series of measures to counter a sharp drop in profitability across its insurance businesses in 2015, Zurich had already announced its withdrawal from the compulsory third-party (CTP) ‘green slip’ insurance business that protects drivers against injury claims in the Australian state of NSW.
Global strategy
This move and the Macquarie Life acquisition are all part of strategy which calls on all the company’s units to create more value from existing businesses.
“Our growth ambitions in the Asia Pacific region are underpinned by a strategy which drives value from our balanced portfolio of growth and mature markets and leverages our distinctive capabilities across the region,” said Colin Morgan, Zurich’s Asia Pacific Global Life chief executive.
“This acquisition accelerates that strategy,” he said
Restructuring
In pursuit of this global strategy, Zurich’s Life business in Singapore stopped accepting new policy applications starting 1 December last year.
In the Middle East it announced the closure to new retail and small business customers of its general insurance lines, and said it would exit this business by the end of 2016, or as soon as possible after that.
In the UK, Zurich has begun transferring around 28,000 policies in UK Life’s legacy annuity book to Rothesay Life. Zurich also sold its stake in 7IM Holdings to Caledonia Investments.
“Our 2014 – 2016 strategy aims to generate sustainable, profitable growth in a changing and competitive environment,” the company said in its annual report released on Friday.
“We are prioritising investment in our businesses in high-potential markets where we have strong competitive positions, managing other businesses for value and taking measures to grow our operating earnings,” it said.
The Zurich Insurance Group, headquartered in Zurich, Switzerland, is a leading multi-line insurance provider with a global network of subsidiaries and offices in Europe, North America, Latin America, Asia Pacific and the Middle East.
Zurich Insurance Group is listed on the SIX Swiss Exchange with a current market capitalization of over $33bn (£23.4bn, €30.3bn).
