TOWER life business sold
TOWER has announced this morning that it has sold its life insurance business.
Friday, May 10th 2013, 9:16AM 
13 Comments
Fidelity Life has purchased most of TOWER’s life insurance business.
The announcement this morning confirms a rumour that has been circulating in the market for months.
Fidelity Life will assume management of Tower Health and Life’s in-force business and the group risk business of Tower Life New Zealand.
The aggregate value of the transaction for TOWER, including cash consideration and release of capital, is $189 million.
TOWER will sell most of its non-participating life insurance policies and retain the capital currently held against those policies. TOWER will also retain its participating book and other run-off life insurance assets which have an embedded value of $23 million. The sale implies a total value of $212 million for TOWER’s life insurance business.
Fidelity Life Chairman Ian Braddock said the deal was significant for the company, taking it from fifth place in terms of market share to third.
“Fidelity Life has always been interested in acquisition opportunities, following our previous purchases of the Lumley Life and Farmers Mutual Life businesses, and we feel the Tower Life business will be an excellent fit with our own.”
He said there were a number of conditions to the deal including regulatory approvals.
TOWER’s departing group managing director Rob Flannagan said the company would now focus on delivering high quality general insurance products and services to customers in New Zealand and the Pacific Islands.
"We determined that now was a good time to maximise value to TOWER shareholders by selling this part of the life business. This concludes our strategic review. Going forward, we will be concentrating on growing shareholder value by developing and growing our specialist general insurance business," he said.
TOWER’s half-year results presentation later this month will include details of how TOWER will apply the proceeds, including the amount of capital to be returned to shareholders.
The deal is expected to settle in July.
| « Revamp planned for AX | IFA working on pro-bono offering » |
Special Offers
Comments from our readers
"If you have a spare hour, ring Tower"
maybe they'll answer their phone quicker now.
Apart from the above slandering of "life insurance agents", I assume Goodson is not a business analyst as he obviously does not understand how life companies generate profits.
I thought the whole idea of being an Adviser was to offer independent advice? If in the case that a Tower product was the best for your customer, and priced accordingly, are you saying you still wouldn't recommend it? That is highly independent (not). Also I am unaware of any insurance supplier in the market who has not had service issues at one time or another. Hopefully your customers are receiving the unbiased independent advice which they deserve?
Always unfortunate to hear that nearly 40 people will probably be out of a job.
As a someone who has used Fidelity from time to time it is probably a good idea to review my business and look at the likes of Sovereign and perhaps even One Path who just seem to continue to keep on keeping on without controversy and certainly seem to have the financial grunt - which to me is very important.
Onepath and Sov are owned by Australian banks - tons (millions of dollars) of resource there....
Also Archy both Sovereign and One Path have, in the last couple of years, both had to restructure various departments in the last couple of years (in particular the underwriting departments). Why has there been no controversy? I don't know. Not a big deal? Or deliberately hidden? Either way - sometimes it is just sensible business practice, and very unfortunate.
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
As a Tower Shareholder I see my share value now likely to plummet. What is left? A Fire and General company with minimal return and WOL and Endowment with little, or no, growth potential.
The reality is that Tower has been gutted and anything of value sold off. I really see this as the end.