The impending sale of Australia and New Zealand Banking Group (ANZ)’s life insurance business has attracted the attention of Asian insurers Meiji Yasuda of Japan and AIA Group of Hong Kong. ANZ values its life unit at AU$4.5 billion (US$3.33 billion).
Meiji Yasuda, the third-largest private insurer by assets in Japan, is reportedly interested in ANZ’s wealth business, in addition to the life insurance division. The wealth business has a relatively low-risk, fee-based superannuation business which is attractive to the Japanese insurer.
Meanwhile, if AIA is able to buy ANZ’s life business, then it would greatly boost the pan-Asian insurer’s Australian footprint. Currently, AIA’s presence in Australia is quite small compared to its operations in Hong Kong, Singapore, and Thailand.
ANZ’s life insurance division, called OnePath, has a 10% share of the life insurance market and is the sixth-largest life insurer in Australia. ANZ’s insurance and wealth businesses reported a profit of AU$327 million (US$ 241.3 million) for the year ended September 30, down 24% from the previous year. The decrease was partly attributed to significant changes in company structure and software migration.
Recently, another Australian bank, NAB, sold its 80% stake in its life insurance arm to Nippon Life of Japan. The deal, worth AU$2.4 billion (US$1.84 billion), was finalized last month.
According to analysts, Australian banks are exiting the life insurance sector due to lower returns on equity and new regulations requiring them to hold more capital against their higher-returning mortgage books.
“The landscape is changing,” PwC partner Scott Fergusson told Reuters
. “Organizations are going to focus on their strengths. The divestment is about (banks) choosing to no longer be the manufacturer (of life insurance). It recognizes they still want to sell life insurance to their customers but the underwriter will be someone else.”
AIA considering investments in Indonesian infrastructure
says expanding to China too costly and risky
Japanese insurers MS&AD and Meijei Yasuda mull major international deal