Zurich Insurance Group said it will pay more than $2 billion to acquire the life insurance business from an Asia Pacific-based bank.

Zurich’s $2.14 billion deal to buy OnePath Life from ANZ (Australia and New Zealand Banking Group) gives it a business with reported net earned premiums of $1.1 billion for the 12 months ending Sept. 30, 2017, and an after-tax net profit of $142 million. Plans call for funding the acquisition through cash and debt. The deal dovetails with Zurich’s strategy of reducing volatility, increasing its bank distribution capiabilties and zeroing in on particular types of products, Group Chief Executive Officer Mario Greco said.

“ANZ’s portfolio of non-traditional and profitable retail producdts fits well with Zurich’s strategy to focus on capital-light protection and unit-linked business,” Greco said in prepared remarks. “Further more, it strengthens [Zurich’s] position in Asia Pacific, while building on our strong bank distribution capabilities.”

Jack Howell, Zurich’s CEO’ for Asia Pacific, said in prepared remarks that the Asia Pacific region will be a big engine of growth for the insurance giant’s distribution and service capabilities. It also builds on recent acquisitions of Macquarie’s retail life insurance business and the Cover-More Group, he said.

With this transaction, which is slated to close by the end of 2018 (subject to regulatory approval), Zurich takes on a 19 percent share of the Australian insurance market. Zurich said that share will make it the market’s largest retail life insurance. It also gains about 6 percent of the group life market. What’s more, Zurich’s acquisition complements its existing independent adviser and bank distribution channels in Australia.

Zurich said the deal will contribute to profitability from the start by generating a strong cash flow, which will help support future dividend growth. It also helps reduce earnings volability by giving Zurich’s business a greater focus on life-insurance related iearnings, which are more stable.

The sale includes a 20-year agreement between Zurich and ANZ in Australia, calling for ANZ to distribut life insurance products through its bank channels. With this, Zurich gains access to ANZ’s 6 million customers served through more than 680 branches and more than 2,300 ATMs. There are also digital distribution channels.

Source: Zurich Insurance Group