Tower sells remaining life business to Foundation Life for $36 mln
July 1 (BusinessDesk) - Tower has sold its remaining life insurance business to Australian-owned Foundation Life (NZ) Holdings for $36 million, completing its transformation to a general insurer.
The sale of Tower Life (NZ) includes a payment of $34 million upfront and a further $2 million in two years, the Auckland-based company said in a statement. Tower Life had assets of more than $700 million as at March 31.
Tower kept Tower Life when it sold its health, life and investment units to focus on general insurance, which allowed the company to return about $172 million to shareholders. The company had put a value of $39 million on the business. The slimmed down Tower posted a 70 percent drop in first-half earnings, reflecting gains on asset sales a year earlier, although excluding those gains it turned to a $10 million profit from a year-earlier loss.
Foundation Life is owned b y Melbourne-based Foundation Life Nominees, according to Companies Office records.
Chief executive David Hancock said while his company had decided to retain Tower Life, Foundation Life "came to us with a proposition that recognised appropriate value for shareholders."
Tower reiterated that it may return further capital to shareholders once rebuilding in Canterbury is substantially completed at the end of 2015.
"We see opportunities for growth and are very focused on increasing our market share in general insurance, particularly in Key personal lines," Hancock said.
Tower stock last traded at $1.81 and has gained 3.4 percent this year.