OnePath Life - Financial Strength Rating Change

Following the purchase of Express Scripts Holding Co by Cigna, the S&P Ratings Agency have lowered the Credit Rating of Cigna Corporation and therefore that of OnePath Life.

The rating has changed from A+ (Strong) to A (Strong).

OnePath Life (NZ) Limited has an A (Strong) current insurer financial strength rating under the Insurance (Prudential Supervision) Act 2010 from Standard & Poor's (Australia) Pty Limited.

A summary of Standard & Poor's rating scale is:

AAA Extremely Strong

AA Very Strong

A Strong

BBB Good

BB Marginal

B Weak

CCC Very Weak

CC Extremely Weak

SD or D Selective default or default

R Regulatory Action

NR Not rated

Ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

The full rating scale is available from Standard and Poor's at www.standardandpoors.com

 


Congratulations to CIGNA

Today, 30 November 2018 at 4pm the sale of OnePath to CIGNA New Zealand was finalised. This means that CIGNA is now the new owner of OnePath.

Congratulations to CIGNA, Gail Costa and her team. I expect this was a complex and difficult process. Yet, the work has only just begun, as turning OnePath into an effective adviser unit within the CIGNA business will doubtless involve a lot of work. Nevertheless, as today is Friday, I hope they get to pause and enjoy this significant milestone.

 


Update: sale of OnePath Life to CIGNA

Christine Laverty, Senior Manager, Adviser Distribution, at OnePath has issued the following statement to update us on the sale process:

 

Sale of OnePath Life (NZ) Limited to Cigna New Zealand

Hi Everyone, as you know we recently announced that ANZ Bank New Zealand Ltd had agreed to sell its OnePath Life (NZ) Ltd insurance business to Cigna Corporation.

I’m incredibly excited about the opportunity this represents to you - our valued Advisers, our Industry as a whole and our OnePath team who have all been offered roles with Cigna. A great outcome!

You may be interested in knowing that Cigna Corporation is currently ranked 61st in the Fortune 500, operating in 30 countries. Their New Zealand business (Cigna NZ) is a leading life insurance company that has operated in New Zealand for 100 years, so you can be rest assured you and clients are in safe hands.

In New Zealand, Cigna is looking forward to the opportunity to diversify their distribution network and is committed to investing and growing our Adviser channel.

We recently held a small series of Adviser feedback sessions with Gail Costa CEO of Cigna and some of her key management team. For those of you who joined us, thank you very much, your insights were invaluable and greatly appreciated by the Cigna team. We’ll be seeking even more feedback and ideas in the future but if in the interim, there’s anything you’d like to contribute, please drop me a line, I’d love to hear from you.

Keeping you & your clients up-to-date

We’re absolutely committed to keeping you up-to-date on the progress of the transaction, and making the transition as easy as possible for you and your clients.

As well as these updates we’re working on a number of FAQs which will provide you with all the information you need to know. We’ll send these to you well before the change of ownership takes place.

We’ll also be contacting your clients closer to the time of the sale being completed, to advise them of the change in ownership of OnePath to Cigna NZ and that OnePath remains the underwriter of their policies. We’ll also reassure them that, while the ownership of their insurer is changing – there will be no change to the terms and conditions of their policy as a result of the sale.

Rest assured, we’ll provide you with a copy of any client communications before your clients receive them.

We’re here to help

In the meantime, it’s business as usual as we work through the details of the sale, however if you have any questions, concerns or feedback please don’t hesitate to contact your Regional Sales Manager or myself who will be happy to help.

Regards,

Christine Laverty
Senior Manager - Adviser Distribution, OnePath

 


Experts divided over whether policyholders will emerge from banks' 'life insurance business ditch' better off

Jenée Tibshraeny has written this article on interest.co.nz after there have been a number of life insurers being sold. Tibshraeny discusses the shift in companies, where these changes leave policyholders and if there are any similarities with the general insurance market. One of the experts she quotes is me, and I am quite happy that the new home for OnePath Life's clients is an excellent insurer, with strong customer focus, but others appear to see more danger. On the other hand, it is true that the life industry consolidation would usually mean less choice - but as CIGNA has no adviser business today, in this case, the value of the acquisition is in what it adds, not the potential for cost savings.


Congratulations to CIGNA on commencing a process to buy OnePath Life - UPDATED

Congratulations to CIGNA, Gail Costa and her team should be proud of the deal to acquire OnePath Life. CIGNA's statement covers some of the details:

"Cigna and ANZ have entered into an agreement for Cigna to acquire OnePath Life NZ Ltd. This presents a rare opportunity to significantly grow our business – making us the third largest life insurance provider in New Zealand, with a combined staff of around 500. The acquisition is subject to regulatory approval and it is expected to take 6-9 months to complete the transaction.

The purchase includes a 20-year strategic alliance for Cigna to distribute insurance products via the ANZ bancassurance channel. In addition, Cigna will also acquire OnePath’s wealth specialist and independent adviser channels, which substantially broadens our distribution capability. This acquisition will more than double our size, and enable us to offer wider solutions and become more agile and responsive to our customers’ needs.

We see the OnePath business as a great complement to our existing business. We are aligned on the importance of people, culture and a philosophy of doing right by customers.

This investment in our business is a clear indication that Cigna Corporation is committed to growing our business in New Zealand and has confidence in our ability to execute this transaction."

At this stage that leaves the option open for CIGNA to operate in the adviser market by continuing OnePath Life's offer in some form. It also adds more bank distribution, an area in which CIGNA is already skilled at managing.

The acquisition by CIGNA of OnePath represents another datapoint in a new trend - the return of a once-specialist insurer that had been sold to a bank, back to ownership by a specialist insurer. The same dynamic was at work in AIA's acquisition of Commonwealth Bank's insurance businesses. Other similarities may be found, but the differences are more significant. OnePath is large, but not the scale of Sovereign.

For those of you with a focus on the advice market, you may have to refer to the quarterly life report to refresh your memory as to the size of the CIGNA business: $86million in-force at the end of December 2016, compared to OnePath Life's $199m in-force at the end of September 2017. But internationally, CIGNA dwarfs OnePath Life, of course, and can bring skills and expertise from around the world to help maximise the opportunity. The deal gives CIGNA enhanced access to the channels that currently make up about 60% of all new business production.


Australia: ANZ Sells OnePath Australia, Keeps New Zealand

Andrew Boughey, Head of Adviser Distribution for OnePath New Zealand says "ANZ Australia has today announced the sale of its OnePath Life Insurance business to Zurich Financial Services Australia. Our insurance business here in New Zealand is not part of this sale and it will have no impact on our operations. For us in New Zealand, it is business as usual."