The Australia and New Zealand Banking Group Limited (ANZ) is reportedly looking to offload its US$4 billion life insurance and pension product development unit, to raise funds for boosting capital.
The plans being worked out by Australia's No 4 lender come months after it split its global wealth management business into separate arms, one focusing on developing insurance and pension products and the other focusing on distribution.
The company has already held informal discussions with investment banks on a potential disposal, but there is presently no clear time frame for the launch of a formal sales process, reported Reuters. However, it was also reported that ANZ would streamline its product development division before seeking bids for the business. No final decision to sell the operation has been made, and the lender could yet decide to retain the business.
Mr Paul Edwards, group general manager, corporate communications at ANZ said that the managing director of ANZ’s Australia wealth business, Alexis George, has been appointed to undertake a strategic review of the business in March this year. According to Asia Asset Management, Mr Edwards said: “The internal review is expected to be completed mid-year and any recommendations are expected to be considered by ANZ during the third quarter.”
In 2009, ANZ took full control of its wealth management and life insurance division in after buying a 51% stake in the business from its joint venture partner, ING. From reports by IBISWorld, ANZ has an 8.5% share of Australia’s A$86 billion (US$61.64 billion) life insurance market. ANZ sold its medical insurance business in New Zealand to nib NZ last year.
According to its latest financial report, ANZ’s global wealth business has a global client base of 2.4 million customers and manages A$65 billion in investments and retirement savings. In 2015, the lender also recorded A$1.36 billion in net fund management and insurance income, up from A$1.25 billion in the previous year.
Over the last few years, many Australian financial entities have disposed of their insurance businesses. Last October, National Australia Bank, the country’s largest lender, agreed to sell 80% of its life insurance arm to Japan’s Nippon Life Insurance Company. In March 2016, Macquarie Group sold its life insurance unit to Zurich Insurance Group for an undisclosed sum.
Like many global lenders, ANZ is exiting capital-intensive businesses at a time when banks are under increasing regulatory pressures to have a greater capital buffer against souring loans. The move is seen as an effort to boost capital and focus on core businesses.