New Zealand insurance company Tower has divested its remaining life business, Tower Life, to Foundation Life, in a transaction valued at approximately $36m, as part of its strategy to concentrate on general insurance business.
The transaction, which is pending receipt of regulatory approvals, including from Overseas Investment Office and the Reserve Bank of New Zealand, is likely to complete during August 2014.
Foundation Life operates as a private company, focusing on the acquisition and long-term prudential management of life insurance portfolios which are no longer being actively marketed.
Tower Life 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. As at 31 March 2014, Tower Life had total assets of over $700m.
Commenting on the sale, Tower CEO David Hancock said 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," Hancock added.
"We see opportunities for growth and are very focused on increasing our market share in general insurance, particularly in key personal lines."
"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," Hancock concluded.
Tower disposed of most of its life insurance assets to Fidelity Life Assurance Company for nearly NZ$189m ($159.54m) in May 2013.
Image: Tower divests remaining Life insurance business to Foundation Life . Photo courtesy of stockimages/FreeDigitalPhotos.net.