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Asteron Life sold

After years of speculation Suncorp has sold Asteron Life.

Thursday, April 4th 2024, 10:42AM 9 Comments

Resolution Life Australasia, which earlier bought AMP Life, has now acquired Asteron Life.

Resolution Life Australasia is part a global life insurance group. It is a well-capitalised, trans-Tasman dedicated life insurance provider that will support Asteron Life’s current strategic growth agenda in New Zealand.  Asteron Life will provide Resolution Life Australasia with significant scale and capability, materially increasing its market presence to the benefit of customers.

Under this new ownership there will be no change to Asteron Life’s business operations which will continue to:

  • operate under the same Asteron Life brand and as a standalone New Zealand licenced and incorporated life insurance company;
  • support advisers and their customers using the same Asteron Life team to deliver the same high-quality products and services; and
  • grow through new individual and group customers.

Resolution Life Australasia CEO, Tim Tez commented on the high calibre of the Asteron Life business and Resolution Life Australasia’s commitment to its ongoing growth.

“This acquisition further demonstrates our commitment to the Australasian market and our success in growing our business in the region.

“It follows Resolution Life’s entry into the Australian and New Zealand markets in 2020, and our recent acquisition of AIA Australia’s Superannuation and Investments business.

“Our growth is predominantly through the acquisition of in-force portfolios of life insurance policies as well as remaining open to growing new business in select strategic markets. Asteron Life presents a compelling opportunity to continue to grow through new individual and group customers while continuing to support existing customers.

“Resolution Life will support the Asteron Life business with its momentum and success in the New Zealand life insurance market. As a trusted life insurer, Asteron Life will continue to operate as a standalone New Zealand licenced life insurance company, under its existing brand in New Zealand and support advisers and their customers using the same dedicated team and management.” Tez says.

Suncorp New Zealand CEO, Jimmy Higgins says Resolution Life Australasia’s dedicated life insurance focus will support Asteron Life to meet the evolving needs of customers, advisers, stakeholders and employees. 

“Resolution Life is committed to supporting Asteron Life to continue its strategic growth and digital  modernisation enhancements,” Higgins says. 

Executive GM Asteron Life Grant Willis says Resolution Life Australia has good experience in the execution of complex life insurance transactions and he’s pleased that there will be no change to the day to day running of the business. 

“Our Asteron Life customers and advisers will continue to work with us as they usually do and we will continue to provide and support our market leading products in the Independent Adviser, Employee Insurance and Direct market, with a continued focus on innovation and customer value, and the  claims experience we are known for,” Willis says. 

A dedicated transition team has been established with the primary focus of ensuring a smooth transition with minimal impact to advisers, brokers, customers and our people.

The acquisition is subject to New Zealand regulatory approvals and is expected to complete in ~nine months.

Tags: Asteron

« nib: government has no appetite for tax breaks for health ins premiums[Opinion] Will RBNZ demand proof from Resolution on support for Asteron Life customers? »

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Comments from our readers

On 4 April 2024 at 11:22 am Paul Flood said:
AMP 2.0?
On 4 April 2024 at 11:27 am JPHale said:
Interesting developments. I'm unsurprised as the Aussie life operation has been sold off, and where Asteron Life sat was a bit out on a limb.

I'm also not surprised that Res Life was the buyer. I predicted that they would have 5-10 years where the term life business was okay, but they would run into premium loss headwinds as premiums increased, people retired, and risk cover needs changed.

This looks to be a good fit on the face of it and will likely be good for both organisations.

In the long term, I won't be surprised if Res Life moves the operation under Asteorn Life. It makes little sense to operate two life insurers with twice the costs. When it happens, I expect it will be something similar to the AIA/Sovereign merger in the '00s.

I also doubt Res Life is in the mood to do another migration so soon after the challenges they had with the AMP split and loss of or new establishment of pretty much all of their systems in the process.

We're not losing an insurer today, which is usually what happens with these things; we're gaining the opportunity for an insurer that has been backed into a backwater to rejoin the market.

It's a good thing!
On 4 April 2024 at 3:44 pm Good_Vibes_JA said:
I normally love what you write JP, but I couldn't disagree more!
The way Resolution Life have treated my clients during the take over of AMP has been flat out appalling. The service they have delivered has been a disgrace! The general care and regard for clients (and advisers) has been dismissive and self orientated. They are squeezing every last dollar out of their clients and have no care for how they treat them.

This is widely known, and yet Asteron have happily got into bed with them. Don't try and tell us this is good for both parties, the only people winning here are the Suncorp shareholders.

Asteron you should be ashamed of yourself if you actually care about your clients!!
On 5 April 2024 at 11:23 am JPHale said:
@Good Vibes, I can see how that could be the case. I, too, had the same challenges with my ResLife clients, and I still do to some extent. Service has improved, but it hasn't returned to where we expect it to be.

My comments come from further up the tree from the coal face, and it's a little disingenuous to judge this from where ResLife has been.

For ResLife, the AMP demerger was an unmitigated disaster. It would have been better to print the policy book out on paper and start again with data entry; it would probably have been quicker and cleaner.

Taking a functioning organisation and ripping out the policy system without the admin system, separated processes, working tech, and loss of large numbers of key staff with institutional knowledge, you're going to get what we have seen. (not to mention he lack of published operating procedures for staff I have discussed elsewhere)

That's not to say ResLife managed it well; there were also plenty of missteps and delays in their response.

My point now is they have pulled a whole bunch of stuff together and face the reality of operating a term book that is heading in the direction we've previously discussed.

A new business provider that develops and distributes products keeps a term life book above and functioning. A future merger of the two books will be good for the existing Res Life book.

For Asteron Life, the reality is they were on a limb. Aussie had been sold; their owner clearly wasn't in the life business and was marking time. As much as Asteron Life has engaged in the market, there hasn't been that get-up-and-go you see from providers well capitalised and being pushed from the board. (see Chubb Life and Fidelity Life more recently)

Suncorp selling Asteron Life off was always going to happen; it just didn't happen when they sold the Aussie Life operation.

The piece here for both insurers is they will have the opportunity to improve operational efficiency with a single system and larger policy base to work from.

That means that some of the creaking infrastructure at Asteron Life will get replaced and improved too.

I think it's a good thing for both insurers, time will tell who's right, though I expect it's going to be a mixed bag depending on the point in time you measure it by. And yes, I could be completely wrong too. :D

On 5 April 2024 at 12:28 pm just an opinion said:
Tim Tez stated:
“Our growth is predominantly through the acquisition of in-force portfolios of life insurance policies as well as remaining open to growing new business in select strategic markets"

Does anyone know of any other "Select Strategic Markets" where Res Life are operating books that are open to New Business?
On 5 April 2024 at 3:11 pm Lifer said:
The regulators were never going to happily let the already very small life market in NZ shrink further, so it had to be sold as a going concern. However we all know that the fastest way to make a life company profitable in the short to medium term is to stop writing new business- cutting the not insignificant underwriting and distribution costs.

Look at how profitable Club Life/ING/Cigna became when it lost Newpark support and new business dried up.

A large in force book with minimal outgoings in commissions, u/w costs etc. Why did Fidelity buy the TOWER book and not allow migration ? - same reason, a nice profitable inforce book with no associated acquisition costs. Paid for it self in 4-5 years and everything after that as cream. The Metlife book?

How Asteron performs in terms of keeping its distribution team, product innovations, competitive pricing, U/w etc. over the next 2-3 years will be telling. Hopefully their proposition will still be worthwhile so that advisers actually still do business with them. It's a good client outcome having multiple offerings in a competitive life insurance market.

Just look at the health insurance market in NZ for a non-competitive market.
On 5 April 2024 at 6:37 pm Murray Weatherston said:
Given all the fancy words, isn't Resolution's business model simply to buy in force books that the current owner doesn't want and running them off - their profit or loss is the difference between how much net they collect vs how much they paid for the book?
How many new AMP policies have been sold since Resolution bought the book? My guess is exactly none
On 6 April 2024 at 4:49 pm d chester said:
None of us really know what will happen and time will tell

Run off or open
Resolution business model is cost cutting run off but they may have changed their minds. It is about long term value not short term profit so the short term cash benefits of closing are not maybe the key driver

Well done to the team. They had an owner who did not want them and still stayed relevant. They have communicated well in the last day or so to advisers so well done

On 7 April 2024 at 7:07 am JPHale said:
While Res Life’s model coming in was to sit and manage, it was the first term life book they had tried this with.

NZ is an interesting market as we no longer have a heavy weighting to permanent products and we have long “rented” our cover.

The problem with this is it gets expensive as you age, a very different proposition to permanent products that get paid up and largely have been priced on long-term level premium rates that hang around long into retirement for policyholders.

I was told mid ‘00s if a term life company isn't growing it's going backwards, much the same as the bad analogy of a shark stopping drowns.

We all suggested ResLife underestimated the long term reality of a closed book. Sure there's less capital demand and higher initial relative profit from not doing new business. At the same time you no longer have the ability to cover losses.

Persistancy calcs across providers vary, most include new business. The old Sov one didn’t, it measured directly what‘s there against what was there, and averaged about 92% when I was there, which is a typical calc for the industry.

That 8% per annum loss compounding is the reason ResLife was always going to have challenges as the lid sank to the older higher claiming lives unable to move.

The term life model for insurers means they have to keep adding new business to maintain premium income, at a minimum at the level they are losing.

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