Zurich has finalised its reinsurance arrangements with ANZ, paying $1 billion of upfront reinsurance commission as the first step in its acquisition of ANZ’s Australian life insurance business, OnePath Life.
The sale of OnePath Life was announced in December 2017 and was arranged to consist of two transactions totalling $2.85 billion.
The acquisition will make Zurich the leading life re/insurer in the Australian market, with around a 19% share of the Australian retail life insurance market, and 6% of the group life market.
The deal also includes a 20-year distribution agreement that enables Zurich to sell its life policies through ANZ’s bank network, giving the company access to an additional 6 million customers with touch points at 680 branches.
Having received the reinsurance proceeds, ANZ will continue to work through its capital management options, which may include an additional on-market buyback of up to $1.5 billion.
ANZ recently announced that it intends to neutralise the impact of the Dividend Reinvestment Plan (DRP) through the on-market purchase of shares, which it will commence beginning 18 May.
The $1 billion reinsurance commissions from this first stage of the OnePath Life sale are also expected to cause an increase of ~25bps in ANZ’s APRA Common Equity Tier 1 capital.
