TWR
10/05/2013 08:30
ASSET
REL: 0830 HRS Tower Limited
ASSET: TWR: TOWER Life business sold to Fidelity
10 May 2013
Market Information
NZX Limited
Level 2, NZX Centre
11 Cable Street
Wellington
NEW ZEALAND
Company Announcements Office
Australian Stock Exchange Limited
Exchange Centre
Level 6, 20 Bridge Street
Sydney NSW 2000
AUSTRALIA
TOWER Life business sold to Fidelity
TOWER Limited today announced that it has sold most of its life insurance
business to Fidelity Life Assurance Company Limited (Fidelity Life). The
aggregate value of the transaction for TOWER, including cash consideration
and release of capital, is $189 million.
Fidelity Life is a New Zealand owned company that specialises in life
insurance, personal protection, business insurance, savings, investment and
KiwiSaver.
Under the agreement with Fidelity, TOWER will sell most of its
non-participating life insurance policies and retain the capital currently
held against those policies, releasing an aggregate amount of capital of $189
million. In addition, TOWER will also retain its participating book and other
run-off life insurance assets which have an embedded value of $23 million.
The sale implies a total value of $212 million for TOWER's life insurance
business.
TOWER Group Managing Director Rob Flannagan said TOWER would now focus on
delivering high quality general insurance products and services to customers
in New Zealand and the Pacific Islands, leveraging off its strong market
position and brand reputation.
"We determined that now was a good time to maximise value to TOWER
shareholders by selling this part of the life business. This concludes our
strategic review. Going forward, we will be concentrating on growing
shareholder value by developing and growing our specialist general insurance
business," he said.
Fidelity Life Chairman, Ian Braddock says the deal is significant for the
company, making it the third largest life insurer in terms of in-force market
share, and ensuring more opportunities for policy holders, staff and
shareholders.
Mr Braddock added "It is important that we have a strong New Zealand owned
company in our financial services industry. This will give us the scale to
expand further into the market."
Mr Flannagan said the half year results presentation on 28 May will include
details of how TOWER will apply the proceeds of the transaction, including
the amount of capital to be returned to shareholders. At that time, TOWER
will also provide pro-forma financial information to reflect the sale of its
life insurance business; information relating to the ongoing capital
structure and earnings and dividend guidance for the ongoing specialist
general insurance business and remaining assets.
Any TOWER life customers with queries can contact their adviser or call TOWER
on 0800 754 754 for more information.
The sale of TOWER's Life insurance business is subject to terms and
conditions customary for a transaction of this type. Subject to satisfaction
and timing of conditions, settlement is likely to occur in July 2013.
ENDS
For further information, please contact:
Rob Flannagan
Group Managing Director
TOWER Limited
Tel: + 64 9 369 2188
ARBN 088 481 234 Incorporated in New Zealand
End CA:00236046 For:TWR Type:ASSET Time:2013-05-10 08:30:05
