ANZ’s life insurance businesses sold for $2.14 billion

Zurich enters agreement to acquire ANZ’s life insurance businesses in Australia 

ANZ's life insurance businesses sold for $2.14B. See
ANZ’s life insurance businesses sold for $2.14B

Zurich Insurance Group (ZURVY) yesterday announced that it has entered into an agreement to acquire 100% of ANZ’s (ANZBY) life insurance businesses, OnePath Life, in Australia for A$2.85B, or $2.14B.

Both parties expect the transaction, which is subject to regulatory approval, to be completed by the end of 2018.

The transaction price comprises A$1B 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 A$300M.

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.

The acquisition is expected to be funded through a mixture of Zurich’s internal cash resources and senior debt, and is expected to reduce Zurich’s capital position only modestly.

ZURVY closed at $30. ANZBY closed at $21.53.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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