3 Comments 3 Commentsby Susan Edmunds
Over the past 12 months, both the health insurance and investment arms of TOWER have been sold.
The health business was sold to nib holdings for $103 million. Last month, it was announced that TOWER’s funds management business was to be sold to Fisher Funds for $79 million. That sale is expected to settle on April 2.
At the company’s Annual General Meeting in Auckland today, shareholders asked about the plans for the life insurance side of the business.
Board chairman Steve Smith said there was nothing to announce about life insurance. “It’s business as usual. Parties express interests in our assets and times we express interest in others.”
He said he could not comment on speculation and when the company had something to announce about life or risk insurance, it would tell shareholders.
It had been rumoured that the AGM would be announced that the life insurance side of the business was to be sold to Fidelity Life. Fidelity had been rumoured to be interested in the investment portfolio and Smith acknowledged it had been sold after a competitive process.
A source said holding on to the business made sense because Fidelity sourcing acquisition capital from reinsurance would likely worry the Reserve Bank solvency test – while the sale of the medical and insurance businesses would keep shareholder GPG happy, which has its eye on selling up.
TOWER’s chief operating officer Michael Boggs said profit from life insurance excluding discount rate movement was $23.7 million for the last financial year. “Management of solvency in line with the new insurance prudential supervision regulations is now embedded within the business, as is monitoring by the Reserve Bank. We continue to operate to targets above the minimum to ensure TOWER’s balance sheet remains strong.”
Shareholders were asked to vote on the proposed return of $120 million from the proceeds of the health insurance sale. Smith said it was highly probably the investment sale would result in a similar return.
Group Managing Director Rob Flannagan has given notice of his intention to resign in a year. Michael Stiassny is taking over from Smith as chairman of the board.
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Doesn't Tower have an adviser force? Who was looking after their KiwiSavers?