Tower sells health insurance business to nib

Tower has announced the sale of its health insurance business to Australia’s nib holdings in a $102 million deal.

Friday, November 2nd 2012, 12:18PM 1 Comment

by Benn Bathgate

Group managing director Rob Flannagan said the sale of Tower Medical Insurance followed a strategic review of the company’s business, announced earlier in the year.

“We have carefully assessed our involvement in and outlook for each of the insurance markets in which Tower operates. We do not consider that we are able to achieve the necessary scale or return in this business in the immediate future, and therefore have made the strategic decision to sell Tower Medical Insurance.”

Nib managing director Mark Fitzgibbon said the ASX-listed company had been eyeing acquisitions in New Zealand for some time as part of its strategy to expand outside of Australia.

“Tower Medical meets nib’s strict investment criteria in terms of strategic rationale and return on investment,” he said.

“With a market share of approximately 13%, Tower Medical provides an opportunity to emulate the success nib has achieved in Australia since its listing in 2007 through brand building, product design, distribution and outstanding customer service.”

Fitzgibbon also highlighted the success Tower Medical has had working with financial advisers, something he said nib planned to continue “to further develop this important distribution channel to grow market share.”

Flannagan said the deal would deliver benefits to Tower customers, the broader New Zealand market and advisers.

“In addition, nib provides financial advisers who distribute Tower products and services with access to a provider with scale and international expertise, as well as the capability to deliver innovative products and services,” he said.

Nib has appointed former chief operating officer Jayne Drinkwater as interim New Zealand CEO, with Glenn Treadwell, current nib group financial controller, as interim CFO.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 2 November 2012 at 6:05 pm RWAW said:

Pity about TOWER using a ruse about splitting off the Medical book for other reasons. Everyone knew they were trying to sell and their credibilty has just taken another hit. Whilst we are on that subject how is Mr Flanagan still overseeing the Titanic when all he has delivered is a dwindling share price and a 40 million dollar IT disaster!BDM are re-shuffled, Distribution Managers are reshuffled, Marketing is reshuffled but the only person that seems safe is the chap at the top. Good luck GPG in getting your money out of this!

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