UPDATE ON WEALTH AUSTRALIA DIVESTMENTS
AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED12 DECEMBER 2017

OVERVIEW•ANZ today announced the sale of its Wealth Australia life insurance business to Zurich Financial
Services Australia (Zurich).

•The sale of Wealth Australia’s life insurance business comprises a sale of 100% of One Path Life
Australia Holdings Pty Limited and a reinsurance arrangement (“OPL”)1. The total proceeds under
the two transactions is $2.85 billion, including a $1 billion upfront reinsurance commission2.

•As part of the sale agreement, ANZ will enter into a 20 year strategic alliance with Zurich to offer
life insurance solutions through ANZ’s distribution channels.

•This follows the 17 October 2017 announced sale of ANZ’s OnePath Pensions and Investments
and Aligned Dealer Groups businesses (“OnePath P&I”) to IOOF Holdings Limited for $975
million.

•Combined outcome (OPL and OnePath P&I):• Total proceeds $3.83 billion• 2017 Price/Earnings multiple on a pro forma cash NPAT3 basis of 16.8x• Expected to increase ANZ’s consolidated CET1 capital position by ~80 basis points4• Estimated accounting loss on sale of ~$640 million5•

ANZ expects completion of transactions to occur in late calendar year 2018. The transactions,including the reinsurance, remain subject to regulatory approval.

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Also includes 100% of OnePath General Insurance – OPGI has in-force premiums of $69m and currently only underwrites the general insurance component of credit insurance policies
Refer page 5 for further details of the reinsurance arrangement
Pro forma basis: Pensions and Investments includes DAC amortisation but is pre ANZ consolidation adjustments and amortisation of acquisition related intangibles, Life insurance and general insurance is pre ANZ consolidation
adjustments and amortisation of acquisition related intangibles
Based on 30 September 2017 Group consolidated total Risk Weighted Assets
The final gain/loss on sale will be determined at completion and will be impacted by transaction and separation costs, final determination of goodwill to be disposed, other balances (including AFS reserve) and final taxation impacts

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ANNOUNCED SALE OF LIFE INSURANCE BUSINESSTRANSACTION SUMMARYTransaction
Sale of Wealth Australia Life Insurance business to Zurich Financial Services Australia
Transaction metrics• Total proceeds of $2.85 billion across two transactions:- $1 billion of upfront reinsurance commission from Zurich (expected to occur in May 2018)- $1.85 billion for 100% of OPL• 2017 P/EV multiple excluding franking credits of 1.0x (0.9x including franking credits).
• 2017 P/E multiple on a pro forma cash NPAT basis of 15.1x• Estimated accounting loss on sale of ~$520 million1 includes:- separation and transaction costs of ~$75 million post-tax- release of Available For Sale reserve- carrying value ~$3.38b (~$2.45 billion NTA, ~$810 million goodwill, ~$120 million VIF & DAC intangibles) 2• Embedded value of OPL at 30 September 2017 $3.31 billion (including franking credits).
• Expected to increase ANZ’s consolidated CET1 capital ratio by a total of ~65bp3 (~25bp uponcompletion of the reinsurance arrangement and a further ~40bp on completion).
• EPS and RoE impacts broadly neutral if capital released is returned to shareholders
1.
2.
3.

The final gain/loss on sale will be determined at completion and will be impacted by transaction and separation costs, final determination of goodwill to be disposed, other balances (including AFS reserve) and final taxation impacts.
As at 30 September 2017
Based on 30 September 2017 Group consolidated total Risk Weighted Assets

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ANNOUNCED SALE OF LIFE INSURANCE BUSINESSSTRATEGIC ALLIANCE & CUSTOMER OUTCOME
Strategic alliance• As part of the sale agreement, ANZ will enter into a 20 year strategic alliance to offer life insurance
solutions through ANZ’s distribution channels.

• ANZ’s Australia Division distribution income for Life Insurance products is expected to be broadly
similar to distribution income received from OPL.
• The strategic alliance will commence upon completion of the sale of OPL.

Customer outcome• A good outcome for customers and shareholders:- Zurich has a long history in Australia and a presence in more than 210 countries and territories with global
capability in providing life insurance solutions- Zurich is experienced in working with banks around the world to provide insurance solutions to more than 60
million customers in 17 countries through over 70 bank agreements including Santander, Citibank, HSBC andING• There are no changes to any current insurance policies as a result of today’s announcement,including general insurance products provided via QBE.

• ANZ will retain the Lenders Mortgage Insurance, ANZFP and ANZ Share Investing businesses
within the Australia Division post completion.

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ANNOUNCED SALE OF LIFE INSURANCE BUSINESSREINSURANCE ARRANGEMENTOverview• To gain early exposure to a portion of OPL earnings, Zurich will enter into a quota share reinsuranceagreement via a $1 billion upfront commission payment• In effect, Zurich acquires the rights to a portion of the profits from OPL’s in-force insurance book
• Arrangement is expected to be in place in May 2018, subject to regulatory approval1

Structure

Profit & Loss impacts for ANZ

Upfront reinsurance commission
ZurichUpfront reinsurance payment of $1 billion• No profit & loss impact• Arrangement has a balance sheet impact, wherein ANZ
replaces an asset (Deferred Acquisition Costs) with cash.
• In turn ANZ recognises a capital benefit to CET1 of ~25bp

ZurichPRE Reinsurance Treaty• ANZ’s coverage remains unchanged and full profits will
be earned up to the date of the Reinsurance Treaty.

ANZ

Zurich makes upfront commission payment
to ANZ for reinsurance agreement

Portion of in-force insurance book
ANZ

Zurich receives a portion of premiums fromthe OPL in-force bookOngoing reinsurance recoveries

ANZ

1.

ANZ receives reinsurance recoveries from
Zurich on business reinsured

ZurichPOST Reinsurance Treaty• ANZ forgoes a portion of the profits of OPLs in-force
book (estimated ~$22 million post tax in FY18, ~$54million on an annualised basis).
• Substantial portion of portfolio will be reinsured
however cost of administering portfolio is fully covered.

In the event of the reinsurance arrangement not proceeding, sale of OPL would proceed as a single transaction with total proceeds of $2.85 billion. Transaction would remain subject toregulatory approval

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W E A LT H A U S T R A L I A D I V E S T M E N T S - 2 0 1 7Transactions

OPL (Announced today)

OnePath P&I (Announced 17 October 2017)

Products

Insurance products include:• Advised Life (OneCare and closed products)• Direct Life (upgraded suite and closed products)• Group Insurance• Mastertrust Insurance• Consumer Credit Insurance (Credit Card Insurance, Loan
Protection Insurance and Mortgage Protection Insurance)• Small legacy run-off portfolio of pension and investment
products

P&I Platforms & Products include:• Advised (Retail) including OneAnswer Mastertrust• Advised (Wrap) including ANZ Grow wrap & Oasis badged wrap
• Employer Super (ANZ Smart Choice Employer)• Direct Products (ANZ Smart Choice Retail)• Other closed superannuation products issued by OnePath P&I.
ADGs & ADG Brands: Millennium3, RI Advice, Elders Financial
Planning, Financial Services Partners.

Total proceeds$2,850m$975m

PE Multiple

15.1x 2017 pro forma Cash NPAT

~25x FY17 NPAT (~17x after separation & transaction costs)

Price/EV

1.0x excluding franking credits (0.9x including franking credits)

Gain/Loss (est.)

Accounting loss on sale of ~$520m 1

Accounting loss on sale of ~$120m1,Separation &transaction costs~$75m post tax~$300m post tax

APRA CET1

Expected to increase ANZ’s CET1 by ~65bp

Expected to increase ANZ’s CET1 by ~15bp

ROE & EPS

Impacts are not material to ANZ

Impacts are not material to ANZANZ FY17
Financial
contribution

Pro forma Cash NPAT
Insurance in-force book

FTE4

ANZ: ~900

Combined
position• Total proceeds of $3,825m for combined sales• Equates to 16.8x PE multiple on a pro forma cash NPAT basis• Combined sales to increase ANZ’s consolidated CET1 capital ratio by ~80 basis points

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2.
3.
4.

$189m2~$1.7b3

Pro forma Cash NPATOnePath P&I business FUM
ADG FUA$39m2$48b$19.5b

ANZ: ~1,200 & ADG: 717 aligned advisors

The final gain/loss on sale will be determined at completion and will be impacted by transaction and separation costs, final determination of goodwill to be disposed, other balances and final taxation impacts
Pro forma basis: Pensions and Investments includes DAC amortisation but is pre ANZ consolidation adjustments and amortisation of acquisition related intangibles, Life insurance and general insurance is pre ANZ
consolidation adjustments and amortisation of acquisition related intangiblesIncludes Life Insurance, and OnePath General insurance in-force premiums of $69m
FTE as at 30 June 2017. ADG aligned advisors are sourced from ASIC (as at 3 October 2017)

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W E A LT H A U S T R A L I A D I V E S T M E N T S - 2 0 1 7
FINANCIAL CONSIDERATIONSFY17 Cash Profit
FY17(Wealth Aus. Total)

FY17(Divested businesses1)

FY17(Retained businesses)

Operating income

1,086

694

392

Operating expenses

(743)

(482)

(261)

Profit before income tax

343

212

131

Cash profit after tax

238

14395

Group adjustments85

Cash profit pro forma2

228

Mostly internal funding costs &amortisation of acquisition related
intangibles, to cease uponcompletion of divestment$m

FY18 considerations
Divested businesses1

Retained businesses• Completion expected in FY19. Impact on FY18
financials is expected to be limited to:• ANZ to retain Lenders Mortgage Insurance,
ANZFP, General Insurance distribution & ANZ
Share Investing3- Foregone profit on a portion of the in-force
insurance book upon commencement ofthe reinsurance agreement (refer slide 8)- Some separation costs to be incurred inFY18 (refer slide 8)
1.
2.
3.

• Australia Division currently generates income
from the distribution of Life Insurance products
and will continue to earn distribution income

OnePath P&I and OPL
Pro forma basis OnePath P&I includes DAC amortisation but is pre ANZ consolidation adjustments and amortisation of acquisition related intangibles, OPL is pre ANZ consolidation
adjustments and amortisation of acquisition related intangibles
On 8 March 2017 ANZ announced an agreement with CMC Markets to provide a market leading share trading solution to customers under the ANZ Share Investing brand7

I M PA C T O F A L L A N N O U N C E D D I V E S T M E N T S
ANZ 2018 FINANCIAL IMPACT

INDICATIVE CHANGE IN CONTRIBUTION FROM DIVESTMENTS (FY18 vs FY17)1$m

Asia Retail

SRCB

MCC

UDC

Revenue
Expenses – Direct~-570~-185-58-39~-80~-25Expenses – Indirect~-85

Provisions
Cash Profit(pre gain / loss on sale)~-85

Gain / (Loss) on sale
CET1 impact

Basis for lower earnings

OPL6~-32

FY18Total(lowerearnings)~-779~-210~-85~-5~-175-58-39~-40~60Nominal~245~100~6+ bp

~40bp

~9bp

~10bp

Cessation ofequityaccounting
earnings~9 months
earnings impact

3 divestments in2H17, 3 in 1H18:
Revenue -~85%,Direct exp. -~85%
Indirect exp. -~30%
Provisions -~70%

OnePathP&I

Cessation ofequityaccounting
earnings~-90~-22~-1903-

OnePath P&I• Completion est. FY19
• Loss on sale ~$120m 2• CET1 impact ~15bp
OPL• Completion est. FY19
• Loss on sale ~$520m2• CET1 impact ~65bp5

~-334
~2154

~255

~90+ bp

Cessation of
insurance incomeunderreinsurance
arrangement

All divestments are indicative and subject to regulatory approvals
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2.
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6.

Indicative only based on anticipated timing and FY17 earnings as a basis for FY18. FY17 not necessarily representative of future earnings
Total estimated accounting loss on sale at completion
Portion of separation costs expected to be incurred in FY18. Refer to OnePath P&I and OPL call out boxes for total estimated accounting loss on sale
Includes MCC ~245m, UDC ~100m, Asia Retail ~60m, OnePath P&I and OPL separation costs of ~$(190)m~25bp upon commencement of the reinsurance arrangement, further ~40bp upon completion of sale
Indicative change is based on estimated FY18 earnings after allowing for the impact of the reinsurance arrangement

8Further Information
DISCLAIMER & IMPORTANT NOTICE: The material in this presentation is general background information
about the Bank’s activities current at the date of the presentation. It is information given in summary form anddoes not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors
and does not take into account the investment objectives, financial situation or needs of any particular investor.
These should be considered, with or without professional advice when deciding if an investment is appropriate

Our Shareholder information

This presentation may contain forward-looking statements including statements regarding our intent, belief orcurrent expectations with respect to ANZ’s business and operations, market conditions, results of operations
and financial condition, capital adequacy, specific provisions and risk management practices. When used in thispresentation, the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar
expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as ofthe date hereof. Such statements constitute “forward-looking statements” for the purposes of the United States
Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release theresult of any revisions to these forward-looking statements to reflect events or circumstances after the datehereof to reflect the occurrence of unanticipated events.

shareholder.anz.com

Equity Investors

Jill Campbell

Cameron Davis

Katherine Hird

Group General Manager Investor Relations+61 3 8654 7749
+61 412 047 448
jill.campbell@anz.com

Executive Manager Investor Relations+61 3 8654 7716
+61 421 613 819
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Senior Manager Investor Relations+61 3 8655 3261
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Retail Investors

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Michelle Weerakoon

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