Sharechat Logo

Fidelity Life acquires most of Tower's life insurance business

Friday 10th May 2013

Text too small?

Fidelity Life Assurance has acquired most of Tower's life insurance business for a net amount of about $70 million, propelling the closely held company to the third-largest in the market.

Fidelity, whose businesses include life insurance, business insurance and KiwiSaver, is acquiring most of Tower's non-participating life insurance. The Auckland-based company has a strategy of growing organically and through acquisitions, though assets such as Tower's life business "don't come along very often," said chief executive Milton Jennings.

He declined to comment on how Fidelity is funding the deal. Tower puts a total value on the sale of $189 million including cash consideration and release of capital though Jennings says it nets down to about $70 million once liabilities are accounted for.

Tower is retaining the capital currently held against the life insurance policies and keeping its participating book and other "run-off" insurance assets which it says are worth $23 million.

The sale marks a further step in Tower's strategy to divest non-core assets after a strategic review, having sold Tower Investments to Fisher Funds for $79 million and its medical unit to Australia's nib last year for $102 million, returning capital to shareholders.

Tower will now focus on its general insurance products and services, said managing director Rob Flannagan. The latest sale concludes Tower's strategic review.

Flannagan is stepping down from his role at Tower following the completion of the listed insurer's strategic review and asset sales. He will work out the 12 months of his notice.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Tower to return 'initial' $70M of capital from sale of life business
Tower shares fall to 2-month low as licensing requirements may weigh on capital returns
Tower's licensing talks with RBNZ may push up minimum solvency requirements
Tower names Hancock as new chief executive, replacing Flannagan
Tower posts first-half profit as asset sales reap gains of $51.4 mln
Flannagan to leave Tower after strategic review, asset sales
Tower FY profit jumps 67%, to return $120M to shareholders; shares jump
Tower sells medical insurance unit to nib for $102M
Stiassny joins Tower board as questions linger over strategy
Tower lifts premiums for house, contents and motor cover