The Australia and New Zealand Banking Group (ASX: ANZ) sale has continued today with the banking giant offloading yet another asset.
According to the release, ANZ Group's New Zealand subsidiary has agreed to sell the OnePath Life NZ business to specialist insurance business Cigna Corporation.
Cigna has agreed to pay NZ$700 million (A$644 million) for the business, which is a slight premium to the embedded value and is expected to generate a gain on sale of approximately NZ$50 million.
The sale is also expected to lift ANZ Group's Level 1 and Level 2 CET1 ratios by approximately 5 and 15 basis points, respectively.
This won't mean the end for life insurance in New Zealand for the bank, though. The sale includes a 20-year strategic alliance for Cigna to provide insurance solutions for ANZ bank customers.
Under the agreement, ANZ New Zealand will continue to offer life insurance to its customers, but these insurance policies will be manufactured and managed by Cigna. This is consistent with how the bank currently provides motor vehicle, home, commercial, and travel insurance with its specialist insurance partners.
The sale remains subject to regulatory approval and is expected to complete in FY 2019.
Is ANZ Bank a buy?
While I don't think that this agreement could be classed as a game-changer, I do like the way the bank is offloading non-core assets and simplifying its business.
In my opinion, the simpler that ANZ Bank becomes, the more attractive it is. So this is certainly another step in the right direction and could make it worth taking a closer look.
While it wouldn't necessarily be my first pick in the banking sector, it wouldn't be far behind. I would put it just behind Westpac Banking Corp (ASX: WBC), but ahead of Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB).
