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Fidelity to channel Super Fund injection into innovation

Fidelity to channel NZ Super Fund capital injection into innovation, future growth: CEO

By Rebecca Howard

Nov. 1 (BusinessDesk) - Fidelity Life will use a $100 million capital injection from the New Zealand Superannuation Fund to help pay for future growth and new innovation, with a focus on the insurer's digital capability and platforms, says chief executive Nadine Tereora.

The two companies yesterday announced the NZ Super Fund plans to take at least a 41.1 percent stake through a $75 million share issue at $115 apiece and the acquisition of at least $25 million of existing stock. The deal is subject to conditions including changes to Fidelity Life's constitution.

CEO Tereora told BusinessDesk the life insurer has grown strongly over the last few years and outpaced its ability to fund its own expansion. Asked whether the NZ Super Fund could eventually take a larger stake, Tereora said "possibilities are always there and I think this is the first step of working with the Super Fund and I am confident the future is really bright"

The company is "looking for new ways that Kiwis can access cover," and that its digital strategy is about "enabling and transforming the customer experience that our advised clients receive" and ensuring customers can access their insurance at any time," she said.

"The digital age we now operating in is 24/7 and it is about enabling customers to transact when they wish to, whether that is at 9am talking to their financial adviser or late at night when they engage with us online," she said.

Ultimately, Fidelity Life's aim is to address the "underinsurance gap" in New Zealand: "Kiwis will invest in bricks and mortar before they will invest in protecting their income or their lives," she said.

Education is key, she said, as there is "actually a bit of myth in play here with New Zealanders. They think ACC is the answer for any loss they suffer, but actually it's not." ACC is for accidents and injury and "even that doesn't cover your full income should you be off work for a significant period of time," she said.

The new funding will also provide additional regulatory capital to grow the existing lines of business, in particular, its adviser channel, she said. The money "will really help fund continued growth around our existing channels as well as new, innovative product lines and ways to market," she said.

Tereora said she was confident the necessary conditions would be met for the deal to go through. "The board is very supportive of this deal and our major shareholders are very supportive so we are confident we will get shareholder approval."

Shareholders, including the Fidelity Family Trust, will vote on changes to the insurer’s constitution needed for the proposal to proceed at the company’s annual meeting on Dec. 12. The deal will settle if the constitution is altered and other conditions are met.

Independent advisers Simmons Corporate Finance have concluded that the value of the Fidelity Life shares involved in the proposed transaction is in the range of $110-$130 per share and that the total value of the company is between $198 million and $220 million.


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