Hanover Group quietly sets up insurance subsidiary

Deborah Hill Cone

Friday 23rd April 2004

Fast-growing financial services company Hanover Group is diversifying into the insurance business on its own account, separate from its investment in listed insurer Tower.

Hanover, the company co-owned by Eric Watson and Mark Hotchin, has quietly launched a new subsidiary, Aldersgate Insurance, to offer payment protection and consumer credit insurance to clients of Hanover's finance companies.

"We do have some specific ideas in mind for further development but will not be all things to all people," Hanover chief executive Kerry Finnigan said.

The new venture is headed by insurance veteran Steve Varley, who has a background as a commercial insurance broker, as well as doing stints at State Insurance (AIG) and broker Ahlers and Associates.

"We're just taking a softly, softly approach," Mr Varley said.

Aldersgate will be competing with companies such as Protector, Crown, Tasman Pacific, Lumley and AIG.

Mr Finnigan said with recent mergers and buy-outs in the insurance industry there were niche opportunities for someone to fill.

"We can provide an opportunity to offer 'big boy' deals to the smaller players in the market and provide tailored solutions to clients that may not otherwise be available," Mr Finnigan said.

Aldersgate had nothing to do with Hanover's 10% stake in listed insurer Tower, Mr Finnigan said.

"As [they are] separate entities, the decision was taken independent of the other. At this point there is no correlation between the two."

It is not hard to start an insurance company with this country's light-handed regulatory regime; Aldersgate simply paid a bond of $500,000 to the Public Trust office and was basically ready to go.

Many insurance companies, particularly those offering general insurance products, must also get a credit rating, but it is not compulsory for Aldersgate and it has chosen not to.

"To enter the market sooner rather than later we elected to forge ahead at what was considered an opportune time.

"Our intention is to obtain a rating in the future as the company develops and the types of insurance product provided require a rating."

An insurance website reports the company plans to look at the health insurance market and possibly coverage for the performance of loans covering property development.

A significant proportion (64%) of Hanover's subsidiary Elders' loan book is lent to property developers and investors, while Hanover has a stake in healthcare provider Metlifecare.

Mr Watson also separately owns the majority of the shares of listed healthcare company Eldercare.

Meanwhile, Hanover office technology company Onesource, a subsidiary of the Hanover Group, this week announced what amounts to a takeover of Konica Minolta New Zealand.

Described as a merger between Konica Minolta New Zealand and U-Bix, the document solutions division of Onesource, the deal signals a significant shift in the sizeable local copier market.

The combined entity will have turnover of about $140 million a year, more than 600 staff and about a 45% market share.

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