by Susan Edmunds
Several shareholders and policy-holders quizzed the board about poor investment returns and the sell-off of the investment and health insurance arms of the business.
They claimed the branches of the business had been sold at a discount and the company had been “brought to its knees” by the board and the GPG shareholders, who wanted to sell off the firm.
But interim chairman Steve Smith said the sales were part of a strategic review process that had decided the full value of TOWER’s operations across four business lines was not reflected in its share price.
He said the decision to sell the health insurance side of the business was made because TOWER did not think it could achieve the necessary return in the business in future. “Scale is an important factor in determining long-term viability.”
Smith said the health insurance market in New Zealand is shrinking because New Zealanders cannot afford the premiums. Three-quarters of the health insurance market is not-for-profit organisations that do not have to provide value for shareholders.
Smith said the decision to sell the investment arm of the business to Fisher Funds was because TOWER did not have the distribution arrangements in place that are necessary to ensure success when margjns were being eroded by KiwiSaver.
Michael Stiassny is taking over as board chairman.
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