Cigna Corp, the New York Stock Exchange-listed health services company, has agreed to acquire ANZ Bank New Zealand's OnePath Life NZ business for $700 million.
The firm has been an insurance partner to ANZ NZ for 20 years and under the deal announced today it will continue to sell insurance products to ANZ bank customers under a 20-year strategic alliance, it said in a statement.
The deal "diversifies Cigna’s distribution capabilities," said Cigna New Zealand chief executive Gail Costa. "Cigna provides simple, affordable insurance solutions to meet the needs of its customers. It will enable us to provide broader solutions and be more agile and responsive to a broader larger customer base."
The transaction follows the sale by parent Australia and New Zealand Banking Group of its Australian OnePath Life unit for A$2.85 billion to Zurich Financial Services Australia, part of a strategy by the lender to exit non-core operations.
David Hisco, ANZ New Zealand chief executive, said the sale of OnePath "was in line with ANZ’s strategic agenda to simplify its business, and was an opportunity to offer even greater value to ANZ customers through a respected insurance specialist."
ANZ said it would make a gain on the sale of about $50 million, with the transaction value amounting to a "slight premium to embedded value," it said in a statement. Hisco said sourcing life products from Cigna "is consistent with how we provide motor vehicle, home, commercial and travel insurance using a range of specialist insurance partners."
OnePath Life policyholders in New Zealand would continue to receive cover under the terms of their existing policies and workers at OnePath would be offered similar roles with Cigna or ANZ, the bank said.
ANZ's OnePath Life (NZ) division reported a profit of $32.3 million in the year ended Sept. 30, 2017, on revenue of $173.3 million. The insurer sold its medical business to nib Holdings for $24.7 million in the 2016 year.
Three of Australia's 'four pillars' have sold their life insurance units as they contend with tighter prudential requirements, selling assets and raising capital to ensure they meet the regulator's levels.
The dual-listed stock fell 0.7 percent to $30.30 on the NZX today, having declined 4.2 percent this year. Cigna, which says it has 95 million customers worldwide, fell 1.9 percent to US$172.58 in New York and has gained 6.9 percent in 2018.