The regulatory approval process for the sale of Suncorp’s life insurance business Asteron Life to Resolution Life is properly underway, with the Overseas Investment Office (OIO) expecting to make a decision on the transaction by July.
Australian general insurance giant Suncorp announced in April it had sold its life insurance business to Resolution Life Australasia for NZ$410 million.
Resolution Life Australasia will make an initial payment of NZ$250 million upon completion of the sale. The rest of the NZ$410 million will be paid 18 months later, during which time interest will accrue on the outstanding balance.
Resolution Life Australasia is a division of the global insurance group Resolution Life which has approximately NZ$30.4 billion in assets under management in Australia and New Zealand.
However the transaction needs approval from three key New Zealand regulators before it can go ahead: the OIO, the Commerce Commission and the Reserve Bank (RBNZ).
The OIO, a division of Toitū Te Whenua Land Information New Zealand (LINZ) that regulates New Zealand's overseas investments, confirmed to interest.co.nz on Thursday it had received Resolution Life's application to acquire Asteron Life.
The application was under “active consideration” by its overseas investment team and a decision had yet to be made. The OIO expects to make a decision around the transaction by early July at this stage.
“This is a significant business assets acquisition and the test required to be met is the investor test,” the LINZ spokesperson said.
The investor test evaluates whether investors are suitable to own or control sensitive New Zealand assets. LINZ calls the investor test a crucial component in assessing most consent applications.
The Commerce Commission was unable to comment before this story was published, but the RBNZ confirmed it was aware of the proposed sale of Asteron Life to Resolution Life.
“The proposed sale is subject to RBNZ approval under the Insurance (Prudential Supervision) Act 2010. This requires the RBNZ to be satisfied that Asteron Life is eligible to hold a licence under the Act following the sale,” a spokeswoman said.
The criteria under the Act means Resolution Life will need to hold a current financial strength credit rating, demonstrate to the central bank the ability to conduct business “in a prudent manner” and comply with regulations, maintain a specified minimum capital amount, and ensure satisfactory risk management and governance structures.
Additionally, Resolution Life will need to meet requirements regarding its incorporation and ownership structure, adhere to relevant laws and regulatory requirements (especially if an overseas entity), and fulfill obligations under other relevant legislation.
Suncorp expects to have the sale completed within nine months, meaning the insurers will be wanting transaction approval from all three regulators by January 2025.
Suncorp Group CEO Steve Johnston called the sale a “win-win” for stakeholders when the sale was announced in April.
“We have simplified our portfolio in recent years under a strategy designed to align everyone at Suncorp around improving the way we deliver value for our Australian and New Zealand customers. We remain committed to the New Zealand general insurance market as part of our refocused group,” he said.
Suncorp New Zealand Chief Executive Jimmy Higgins also said in April the transaction was in the “best interests” of Asteron Life’s policyholders and the sale would allow the NZ business to focus “exclusively on general insurance”.
Suncorp NZ had denied Asteron Life was up for sale in February 2023 and told interest.co.nz at the time that its life insurance division was a “significant contributor” to its insurance business.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.