Zurich finalises reinsurance deal with ANZ

Australia and New Zealand Banking Group (ANZ) has finalised a reinsurance arrangement with Zurich and has received around $1 billion of reinsurance proceeds.

This is part of the sale of ANZ’s Australian Life Insurance business which was announced on December 12, 2017.

The deal is comprised of two transactions totalling $2.85 billion, including around $1 billion of upfront reinsurance commission, and the sale of 100 percent of One Path Life.

The acquisition is expected to contribute to Zurich’s profitability from day one, generating strong cash flows which will support future dividend growth. The transaction is also expected to 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. The transaction is expected to increase the level of overall cash remittances over the 2017-2019 planning period by $225 million.

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. Under this agreement, Zurich will have access to ANZ’s 6 million customers which are served through the bank’s more than 680 branches and over 2,300 ATMs, as well as digital distribution channels.

As a result of the transaction, Zurich will have an approximately 19 percent share of the Australian retail life insurance market, positioning it as the market’s largest retail life insurer. It will also have around 6 percent of the group life market.

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