UPDATE 2-Zurich Insurance to buy ANZ's life insurance businesses for $2.14 blnGÇìGÇï

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Dec 12 (Reuters) - Zurich Insurance has agreed to buy ANZ's OnePath Life insurance businesses for 2.85 billion Australian dollars ($2.14 billion), the latest and largest foray by the Swiss company into the Australian market.

The deal, announced on Monday, is the third purchase by Zurich in Australia over the last two years as the insurer doubles down on a region where a robust economy and low insurance penetration rates have proved attractive.

Zurich has focused on the Asia Pacific as a major growth driver in its life insurance business, previously picking up Macquaries' retail life insurance business for US$300 million in 2016 and the Cover-More Group for US$554 million in April this year.

The ANZ deal - Zurich's biggest since 2011 - would be immediately accretive to the Swiss company's earnings, and would increase return on equity and shareholder returns, the company said.

It would increase cash flows by around $225 million over the 2017-2019 planning period, Europe's fifth largest insurer added.

ANZ said the outcome of the sale of the OnePath life insurance and pension businesses would be an accounting loss of about A$640 million.

Zurich Chief Executive Mario Greco said in a statement: "The existing portfolio provides a highly cash-generative business that will add to our cash remittances, increase our business operating profit after tax return on equity target by 50 basis points and support dividend growth beyond that implied by our existing plan,"

As part of its 2017-2019 targets, Zurich has promised to pay shareholders 75 percent of its net profit. With the ANZ deal expected to be completed by the end of 2018, the full benefit of the acquisition will become apparent in the 2019 dividend. Following the deal, Zurich will have around 19 percent of the Australia retail life insurance market, making it the biggest provider in the market, it said. CEO Greco also highlighted how the purchase would build up Zurich's distribution of insurance products through ANZ's branches and digital distribution channels.

As part of the deal, Zurich would get access to ANZ's 6 million customers through a 20 year distribution agreement to sell life insurance.

Zurich said it said it would fund the deal from its own cash pile and through senior debt.

On a pro-forma basis, the operations to be acquired reported net earned premiums for the 12 months ended September 30, 2017 of US$1.1 billion and a net profit after tax of US$142 million.

The deal is the largest since Greco took over at Zurich last year. The executive brought in from Generali to engineer a turnaround for the troubled group has promised to make Zurich leaner and more efficient.

For ANZ, the deal marks the realization of plans to offload its Australian insurance and wealth division, flagged over a year ago.

In October, ANZ sold its pension business to Australian pension management business IOOF Holdings for A$975 million. This transaction (with Zurich) will complete the simplification of ANZs Australian wealth business , however we will continue to work hard to minimize any disruption to our customers during the transition, ANZ Group Executive Wealth Australia Alexis George said in a statement. ANZ said there would be no changes to any current insurance policies as a result of the sale. (Reporting by John Revill; additional reporting by Rushil Dutta in Bengaluru; Editing by Adrian Croft and Jane Merriman)