SYDNEY: ANZ Bank said on Tuesday (Dec 12) it has offloaded its life insurance arm to Zurich for Aus$2.85 billion (US$2.14 billion), making the Swiss giant the country's largest retail life insurer by premiums.
It follows National Australia Bank selling most of its life insurance business to Japan's Nippon and Commonwealth Bank shedding its insurance arm to AIA in recent years as Australia's top lenders streamline operations.
ANZ said the sale of One Path Life Australia Holdings, subject to regulatory approvals, was another step in its strategy to create "a simpler, better balanced bank focused on retail and business banking in Australia and New Zealand".
"From the outset we've been focused on partnering with a high-quality organisation culturally aligned to ANZ," said ANZ's Executive Wealth Australia chief Alexis George.
"We're pleased we will be able to provide our customers with access to wealth products from one of the world's leading and most respected global insurers.
"Zurich's experience in working with banks around the world to provide insurance solutions, combined with its commitment to innovation and strong presence in Australia is a good outcome for our customers, shareholders and distribution partners."
It follows ANZ's sale of its OnePath pensions and investments business to IOOF Holdings in October for Aus$975 million.
All of Australia's big banks are battling higher funding costs and lower interest margins, with rules now demanding they hold more reserves as a buffer against mortgages and fears over rising bad loans.
They also face a hefty new government levy to raise Aus$6.2 billion over four years through a 0.06 per cent charge on the borrowings of the big five - ANZ, Commonwealth, Macquarie, NAB and Westpac.
As part of the agreement, ANZ and Zurich will enter into a 20-year strategic alliance to offer life insurance solutions through ANZ's distribution channels.
Following the deal's completion, expected in late 2018, Zurich will be Australia's largest retail life insurer as measured by in-force premiums, with more than 1.5 million customers, or a 19 per cent share of the market.
The deal comes on the heels of a string of Asia-Pacific acquisitions by Zurich, with chief executive Mario Greco saying it was a good fit for its growth strategy.
"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," he said.
"Furthermore, it strengthens the group's position in the Asia-Pacific, while building on our strong bank distribution capabilities."