ANZ offloads life insurance business for $2.85bn

The sale is comprised of two transactions with total proceeds of $2.85 billion, inclusive of $1 billion of upfront reinsurance commission from Zurich.

This follows the sale of its OnePath pensions and investments (OnePath P&I) and aligned dealer groups (ADG) business to IOOF Holdings Limited (IOOF) in October for $975 million. Total proceeds from the simplification of Wealth Australia is $3.83 billion.

Following completion of the sale, Zurich will be Australia’s largest retail life insurer as measured by inforce premiums with more than 1.5 million customers, while IOOF will have a top-five superannuation platform with the second largest aligned financial advice network.

The deal is expected to increase ANZ’s consolidated CET1 capital ratio by a total of ~$2.5 billion or ~65 basis points (~25 basis points upon completion of the reinsurance arrangement and a further ~40 basis points on completion).

The life insurance sale is part of a broader simplification strategy by ANZ, which has refocused its energies on domestic markets, particularly home lending and small business banking in Australia and New Zealand.

ANZ chief executive Shayne Elliott said that the bank is “almost halfway through” its simplification process, which has also involved selling some partnership stakes in Asia.

“We’ve sold quite a number of businesses. In fact, I think at last count up to about 17 disposals, some big and obviously a lot quite small. So, I think we’ve really got momentum on that. We’ve reduced the number of products that are available in our branches, which is again another important part of simplification,” Mr Elliott said.

“It all goes back to this really simple philosophy that in a complex world, we know that our customers are busy and just want us to help them out.

“The way to win for our customers and our shareholders is to do a few things and do them incredibly well. We’re really clear on what those few things are and essentially we are just exiting, shrinking or partnering on everything else. We’re more than halfway through. But we still have a long way to go.”