SYDNEY - [AAP] Australian and New Zealand Banking Group (ASX: ANZ) has agreed to sell its life and consumer credit insurance business OnePath Life to international insurance giant Zurich for $2.85 billion.

The takeover, which is subject to regulatory and other approvals, will result in Zurich becoming Australia's largest retail life insurer as measured by inforce premium with more than 1.5 million customers, ANZ said in a statement on Tuesday.

The announcement follows ANZ's decision to sell its OnePath pensions and investments business and aligned dealer groups business to IOOF Holdings Limited in October for $975 million.

The new agreement will allow Zurich to significantly expand, via a 20-year agreement for the distribution of life insurance products through ANZ's bank distribution channels, and an opportunity to establish a strategic alliance with IOOF.

ANZ said the sale completes the "simplification" of its Australian wealth division and is another step in creating a "simpler, better balanced bank" focused on retail and business banking in Australia and New Zealand.

Chief executive Shayne Elliot described the agreement as a "marriage of two great companies" that would benefit customers, particularly with new technology and new disruptive competitors.

"It all goes back to this really simple philosophy that in a complex world, we know that our customers are busy and just want us to help them out," Mr Elliot said.

"Essentially, we are just exiting, shrinking or partnering on everything else."

Mr Elliot said customers would still be able to access life insurance products at ANZ branches, online or through a call centre and that the only change would be in terms of the manufacturing and management of those products.

He also hinted that the bank would consider returning capital--made from both the Zurich and IOOF transactions--to shareholders through either dividends or buybacks if there is money left over following regulatory and other business costs.

"If we have excess then there are options to return it," Mr Elliot said on Tuesday.

"Generally, those things would be through either dividends, although our ability there would be constrained by franking, or potentially through buybacks of some description."

ANZ said the deal, which is expected to be completed late next year, will not change any current insurance policies, including general insurance products provided via QBE.

 

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