Listed insurance company Tower (NZSE: TWR) has bought the health business of fellow insurer AXA (NZSE: AXA) for $16 million.
Tower MD, James Boonzaier, says the purchase doubles his company's share of the health insurance market. It is now the second biggest behind Southern Cross.
Mr Boonzaier says it has also added a range of comprehensive health insurance products to complement Tower's medical range, and has boosted the company's presence in the group and corporate market.
Tower says its health operations will be merged with the new acquisition the next three months, and the combined company will have premium income of $80m and 170,000 clients. It is forecast to be positive for Tower Group's earnings per share within the first year.
AXA New Zealand CEO, Ross McEwan, says while the sale of AXA Health takes his company out of health insurance from a manufacturing perspective, it still intends to distribute a range of health insurance products.
"We have negotiated an agreement with Tower to distribute health insurance policies through our adviser network. This will ensure that we continue to offer health products as part of our services to customers.
"Moving out of health product manufacturing also assists us in our strategy of focussing on our core business, which is investment and life insurance."