Dorchester Pacific pulls the plug on life insurance
Listed finance company and insurer Dorchester Pacific has announced it will be exiting the life insurance market and focusing on consumer insurance products.
Wednesday, December 21st 2011, 9:52AM
by Niko Kloeten
The company said in an NZX announcement that these consumer insurance products were more aligned with Dorchester's lending business.
"As was indicated at the recent AGM, Dorchester Life's insurance business has become complex for its overall scale and the new regulatory environment will add considerable costs to the operation in its present form," chief executive Paul Byrnes said.
Dorchester will run out its existing term life business and will pursue an insurance licence under the new Insurance (Prudential Supervision) Act focused on non-life products.
The Dorchester SuperLife savings product with life cover has also been closed to new policyholders.
The company will continue to distribute its existing Funeral Plan, Personal Accidental Death and EasyLife products but will seek a life underwriter for these products.
Meanwhile, existing consumer insurance products including loan protection insurance will be further developed and additional non-life consumer products added and launched by April 2012.
Byrne said the changes will "greatly simplify" Dorchester's insurance business, while the one-off costs are "not very significant."
He said the new consumer insurance product sales, together with lower overheads and operating costs in the division, will produce a higher profit for the insurance division next year.
"The improved performance of the insurance business will contribute to the objective of achieving a better than break-even trading result for the Dorchester group in the next financial year."
Dorchester Pacific managed to keep itself afloat last year by convincing investors to vote for a debt-for-equity swap.
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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