01 Jul 2014
(Auckland, NZ) TOWER Limited today announced that it has sold its remaining life business, TOWER Life (N.Z.) Limited to Foundation Life (NZ) Holdings Limited ("Foundation Life"), subject to conditions precedent including regulatory approvals. The aggregate value of the transaction is $36 million.
Foundation Life is a private company that is focused on the acquisition and long term prudential management of life insurance portfolios which are no longer being actively marketed.
TOWER Life (N.Z.) Limited comprises TOWER’s residual "run-off" life business including a participating book, annuity business, unit linked book and a small amount of traditional non-participating term insurance. TOWER Life (N.Z.) Limited had total assets of more than $700 million as at 31 March 2014.
TOWER Chief Executive Officer David Hancock said today the sale reflected TOWER’s new focus as a pure-play general insurer, and its commitment to delivering value to shareholders.
"TOWER is committed to delivering attractive shareholder returns by growing a general insurance business that is a leading light in New Zealand and the Pacific. We see opportunities for growth and are very focused on increasing our market share in general insurance, particularly in key personal lines. TOWER Life (N.Z.) Limited has performed well and delivered solid results, and we expect the business to continue to flourish under new ownership."
Although TOWER had made the decision to retain TOWER Life (N.Z.) Limited in January this year, Mr Hancock said it had continued to receive approaches and assessed these against the potential shareholder value that could be delivered.
"Foundation Life came to us with a proposition that recognised appropriate value for shareholders," he said.
The prospective Chairman of TOWER Life (N.Z) Limited, David Harrison, said "the Foundation Life team is looking forward to working with the many stakeholders, including policy holders and staff, to further strengthen and improve the business."
Mr Hancock said TOWER Life (N.Z.) Limited has many long-term and loyal customers who are very important to the business. "There will be no changes to their existing policies under Foundation Life."
The consideration will be satisfied with $34 million payable upon completion and a further $2 million payable two years after completion.
Mr Hancock said TOWER continues to invest in customer service, technology and new products in its core general insurance business in New Zealand and the Pacific, which provide attractive growth opportunities.
"The sale of the remaining life business will add to our capital reserves that remain well above regulatory requirements and our own long-term targets. Beyond the sale of these life assets, the substantial completion of the Canterbury rebuild at the end of 2015 should release further significant capital. As we said at the time of the first half results, the company will consider further capital returns to shareholders where possible."
Any TOWER Life (N.Z) Limited customers with queries can call TOWER on 0800 379 372 (push 3 then 3) or alternatively, can email email@example.com for more information.
The sale of TOWER Life (N.Z.) Limited is subject to approval by the Overseas Investment Office and the Reserve Bank of New Zealand and is otherwise on terms and conditions customary for a transaction of this type. Subject to satisfaction and timing of conditions, settlement is likely to occur in August 2014.
Who are the new owners?
Foundation Life (NZ) Holdings Limited is a private company that is focused on the acquisition and long term prudential management of life insurance portfolios which are no longer being actively marketed.
I have a policy with TOWER Life (N.Z.) Limited – what does this proposed sale mean for me?
Your policy is unchanged by the proposed sale. Going forward however the business will be owned by Foundation Life Limited rather than TOWER Life (N.Z.) Limited.
Is my policy protected?
The proposed sale is subject to regulatory approvals, including from the Reserve Bank of New Zealand, which administers the Insurance (Prudential Supervision) Act 2010.
Who will manage TOWER Life (N.Z.) Limited’s funds?
The existing fund management arrangement is unaffected by the proposed sale of the business.
When will Foundation Life begin managing the policies?
Subject to regulatory approvals, settlement is likely to occur in August 2014.
Will I still deal with the same people?
Yes, the staff of TOWER Life (N.Z.) Limited will be transferring along with the business. You’ll still deal with the same people and all contact details for TOWER Life (N.Z). will remain the same at this point.
I am a TOWER Life policyholder with shares in TOWER – what does this mean for me?
The ownership of your shares is unaffected by this sale. Any share enquires are to be directed to Computershare or via phone 0800 222 065 or 09 488 8700.