Zurich Insurance Group AG has agreed to buy Australia & New Zealand Banking Group Ltd.'s life insurance business, OnePath Life Ltd., for US$2.14 billion, or A$2.85 billion.
Zurich said the deal, which it expects to complete by the end of 2018, will make it the leading retail life insurer in Australia with a market share of around 19%. The target company had net earned premiums of US$1.1 billion and a net profit after tax of US$142 million for the year to Sept. 30.
The transaction price comprises A$1 billion of upfront reinsurance commissions, paid in May 2018, subject to regulatory approval, with the remainder paid once the deal is complete.
As part of the deal, Zurich will enter a 20-year deal under which ANZ will distribute Zurich's life insurance business through bank channels to ANZ's 6 million customers.
Zurich expects the deal to contribute to its profitability from day one and as a result the insurer expects to increase its operating profit after tax return on equity target by 50 basis points by 2019. It also expects the deal to increase cash remittances between 2017 and 2019 by A$225 million.
Zurich group CEO 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."
The deal follows the acquisitions of Australia-based travel insurer Cover-More in April and the life insurance business of Macquarie Group Ltd. in 2016. Zurich operates in Australia through Zurich Australian Insurance Ltd.
As of Dec. 8, US$1 was equivalent to A$1.33.
