ANZ has finalized its reinsurance arrangements with Zurich and received about $1bn of reinsurance proceeds.

The divestment of Australian life Insurance business of ANZ was announced on 12 December 2017.

The sale included about $1bn of upfront reinsurance commission, and the divestment of 100% of One Path Life.

ANZ stated that having received the reinsurance proceeds, it will continue to work through its capital management options, including additional on-market buyback of $1bn to $1.5bn.

The company will confirm its plans once it analyzes the various alternatives and the required approvals are completed.

Zurich stated in December that the acquisition could contribute to its profitability from day one, as it can generate strong cash flows which can support its future dividend growth.

The transaction will also increase the proportion of stable life protection-based earnings, decreasing its overall group earnings volatility, while increasing the proportion of life earnings remitted as cash back to the company.

The transaction will increase the level of overall cash remittances to $225m over the period 2017- 2019 period.

As part of the transaction, Zurich has agreed to distribute life insurance products through bank channels for 20 years with ANZ in Australia.

Zurich will have access to ANZ’s 6 million customers who are served through the bank’s 680 branches and digital distribution channels.

With the transaction, Zurich expects to have about 19% of share in the Australian retail life insurance market, positioning it as largest retail life insurer. It also expects a 6% market share in group life market.

When the transaction was announced back in December, ANZ Group Executive Wealth Australia Alexis George said: “From the outset we’ve been focussed on partnering with a high-quality organisation culturally aligned to ANZ and 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.”

Image: ANZ Centre at Collins Street. Photo: Courtesy of Australia and New Zealand Banking Group Limited.