Zurich Insurance Group (Zurich) has inked an agreement to acquire Australia and New Zealand Banking Group’s (ANZ’s) life insurance businesses, OnePath Life, in Australia in a deal valued at AUD2.85bn ($2.14bn).

The deal includes AUD1bn of upfront reinsurance commissions, expected to be paid subject to regulatory approval in May 2018 with the remaining balance paid on closing of the transaction.

Upon completion of the deal by 2018-end, Zurich will have about 19% share of the Australian retail life insurance market.

Zurich Insurance group CEO Mario Greco said: “ANZ’s portfolio of non-traditional and profitable retail products fits well with Zurich’s strategy to focus on capital-light protection and unit-linked business. Furthermore, it strengthens the Group’s position in Asia Pacific, while building on our strong bank distribution capabilities.

“In addition, the existing portfolio provides a highly cash-generative business that will add to our cash remittances, increase our business operating profit after tax return on equity (BOPAT ROE) target by 50 basis points and support dividend growth beyond that implied by our existing plan.”

Zurich believes that the takeover of OnePath Life is Australia will contribute to the group’s profitability from day one, generating strong cash flows which will support future dividend growth.

As part of the deal, Zurich will sign a 20-year bancassurance agreement with ANZ in Australia to distribute life insurance products through bank channels. The agreement will give the Swiss insurer access to ANZ’s six million customers.

Zurich CEO for Asia Pacific Jack Howell said: “Zurich has earmarked the Asia Pacific region to be a major engine of growth in distribution and service capabilities, building on our recent acquisitions of Macquarie’s retail life insurance business and the Cover-More Group. Importantly, we are acquiring a profitable business with loyal customers and a track record of strong, stable cash flows.”