Zurich deal to lift ANZ options
ANZ could boost dividends or buy back shares in a potential windfall for investors next year after it receives $ 2.85 billion for its life and consumer credit insurance businesses.
The bank announced yesterday it had struck a deal to sell the OnePath Life businesses to Swiss financial services titan Zurich Insurance.
It means the Swiss company, from its Zurich Australia division, becomes the nation’s biggest retail life insurer with more than 1.5 million customers.
Under chief executive Shayne Elliott, ANZ has been selling divisions that it believes are not central to its future as a retail and institutional bank.
The latest deal follows the $ 975 million sale in October of ANZ’s On- ePath pensions and investments business and aligned dealer groups business to wealth manager IOOF.
ANZ chief Shayne Elliott said the deal with Zurich opened up options for capital management, but cautioned “we don’t have the money yet”.
Mr Elliott said the bank would receive cash from both of the latest asset sales in about a year.
“On both transactions, going to happen over the months,” he said.
“Depending on where we are at the time, we’ll have to have a look at how much capital we need to run the bank – how much capital we need to satisfy our regulatory responsibilities.”
If the bank had “excess, then there are options to return it”, Mr Elliott said. they’re next 12
“Generally, those things would be through either dividends, although our ability there would be constrained by franking or potentially through buybacks of some description.”
The deal hands Zurich a 20- year agreement for the distribution of life insurance products through ANZ’s bank distribution channels and allows it to build an alliance with IOOF.
Mr Elliott said the move to sell as- sets in order to create a “simpler, better- balanced bank” was complete.
The deal represented the “marriage of two great companies”, he 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,” Mr Elliot said.
“Essentially, we are just exiting, shrinking or partnering on everything else.”
Mr Elliot said customers would still have access to life insurance products at ANZ branches, online or through call centres and the only change would be in terms of the manufacturing and management of those products.
ANZ shares climbed 1.1 per cent yesterday, closing at $ 28.82.