Australia and New Zealand Banking Group (ANZ) has finalised reinsurance arrangements with Zurich and received approximately A$1bn of reinsurance proceeds.
The deal is part of ANZ’s plan to divest its Australian Life Insurance business, OnePath Life, which was announced in December last year.
The deal was structured in two tier transactions totalling A$2.85bn, including around A$1bn of upfront reinsurance commission, and the disposal of 100% of One Path Life.
As a result of takeover of OnePath Life, Zurich will become the leading life re/insurer in the Australian market, with approximately a market share of 19% in the Australian retail life insurance market, and 6% of the group life market.
Zurich noted that the deal will contribute to the group’s profitability from day one, generating strong cash flows which will support future dividend growth.
As part of the transaction, Zurich will sign a 20-year distribution agreement with ANZ in Australia to distribute life insurance products through bank channels.
Zurich will be able to access ANZ’s six million customers served through the bank’s more than 680 branches, as well as digital distribution channels.
The A$1bn reinsurance commissions are also expected to increase ANZ’s APRA Common Equity Tier 1 capital of ~25bps.