[The Wrap] One good deal; One dud deal
In the space of a couple of days two big deals were done in financial services; one was good the other not so good.
Friday, August 19th 2022, 4:50PM 
6 Comments
News Japanese insurer Dai-ichi Life had acquired Partners Life at a price close to $1 billion surely should silence some of the critics.
Partners has been one of those companies which has polarised advisers, with some people being quite critical of its actions over the years. The simple fact Dai-ichi Life has agreed to buy the business, and pay a significant price demonstrates clearly that Partners Life is a damn good business and that well-run life insurance companies are valuable investments.
AMP shareholders must look at this with some disbelief and wonder what happened to its business. How come a company which was a leading life insurer was sold at lower valuations and then put into a wind down process.
Partners is the third life insurance company Ballantyne has been involved in establishing and most probably her last. Twelve years ago when Partners Life started the founders were clear that they were establishing a business that, at some point in the future, they would exit.
While the talked about option was a sharemarket listing, that always looked like a long-shot, especially on the New Zealand bourse and in these current market conditions.
Dai-ichi Life is probably little know to most New Zealand advisers. However, those who what happens across the ditch in Australia will be aware the company bought TAL (the former Tower Life business) back in 2011. Interestingly, New Zealander Jim Minto was was the managing director at the time and now he is the chairman at Partners Life. He has also been a director of Dai-ichi Life Asia Pacific.
What will be reassuring to advisers is the cliche, it's business as usual. The management team are staying on and Dai-ichi has a reputation for buying businesses and letting them continue to run as they were.
As for the dud deal. Well, Fisher Funds $310 million takeover of Kiwi Wealth is a totally different proposition to the Partners deal. It's hard to see anything positive about this deal for the market.
Gone is one of the top five KiwiSaver providers.
Undoubtedly this will be a cost out exercise for the new owners and many good people will lose their jobs. A number of people in the industry who looked at KiwiWealth have said a cost-out will add $10 million to Fisher's profit in the first year alone.
Fisher Funds which was dumped as a default KiwiSaver provider buys its way back into the lucrative clique of fund managers. If this happens it raises some questions around the whole default process.
As for Kiwi Wealth members, we understand the large majority of these people came from Kiwibank (the bank and Kiwi Wealth are owned by Kiwi Group Holdings). The Kiiwbank proposition is all about being New Zealand owned.
As Kiwibank chief executive Steve Jurkovich said in this story, customers are attracted to the company because it is New Zealand owned and the profits stay onshore.
Yes Fisher Funds is majority owned by a charitable trust, Toi Foundation, but 34% (currently) is owned by TA Associates based in the US.
TA Associates is a private equity business that also owns Russell Investments and recently acquired Australian asset manager Yarra which last year bought Nikko's Australian business.
Don't be surprised if some New Zealand owned KiwiSaver providers see this as an opportunity to attract new members.
| « New pie like fund being baked | Tough times ahead for NZ economy: Nikko economist » |
Special Offers
Comments from our readers
The irony is, that all of these companies have one thing in common: people.
Naomi & her team are master business people, who understand that financial services is a relationship industry - one that pivots on things such as trust, integrity and being nimble enough to meet upcoming challenges. Conversely, AMP has endured a legacy of arrogance and greed, often attracting highly paid imbeciles who care more about their personal development than those whom they serve.
Strangely I'm yet to reach a decision on KiwiWealth (following the government's recent announcement to claim the bank as a state asset). Whilst part of me applauds the Fishers team for picking up dollars for pennies, another part agrees that this more represents failure by KiwiBank. I suspect that this aggregation of wealth assets will ultimately find it's way to the highest bidder... who will no doubt be foreign.
The timing of the announcement is stranger still.
Last week Fisher is announced as the winner, and this week kiwibank is 100% government owned.
Must be more to this, than not wanting to own a funds management company.
Haven't done the maths but would think a govt kiwisaver provider might do more to put money into kiwis pockets than a bank?
Their arrogance and incompetence is outstanding.
As another comments, arrogantly thinking that coming from a banking background made them experts about life insurance led to the failure of AMP. When will insurance companies understand that banking is a very poor lead into life insurance. If insurers cannot learn from the destruction of AMP by bankers then they to will follow in the path of AMP.
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
Because institutional arrogance ultimately became AMP’s single biggest handicap to it writing new business. AMP’s management team thought it knew best when it came to life insurance. This was made abundantly clear to advisers whenever they dealt with AMP. AMP’s life products became so inferior to its competitors that it’s 160+ year history & household brand recognition ultimately meant nothing to advisers & their clients. When the exodus of AMP policyholders began in earnest AMP had the cheek to blame advisers for deliberately churning their policies. AMP’s management team continued to have their head in the sand as to why they were not receiving new business. The rest as they say is history.