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Aetna in Tower Group's sights

By Nick Stride

Friday 24th November 2000

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Tower Group this week moved up the list of likely buyers for Aetna Health following the acquisition of Axa Health New Zealand.

Tower paid $16 million for Axa's local health insurance unit, making the group New Zealand's second largest health insurer with 170,000 clients and premium income of $80 million.

With the Axa policies came a computer system capable of processing the large numbers of claims Axa incurred as a minor medical insurer.

Tower's own operation is in "major medical" and its systems were designed to process small numbers of more complex claims.

Tower chief financial officer Keith Taylor said with the new processing capability, it made more sense for Tower to look at the Aetna policies.

Aetna Health New Zealand was taken over by Southern Cross earlier this year.

But in order to get past the Commerce Commission, Southern Cross had to undertake to sell Aetna's policies, keeping the computer systems and public sector contracting businesses. The policies are now in limbo as Southern Cross appeals the commission's ruling it could not keep the policies.

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