Listed insurer Tower has sold its health insurance business for $102 million to Australian listed company NIB Holdings.
Tower group managing director Rob Flannagan said the sale of Tower Medical Insurance followed a strategic review of the group's business, announced earlier in the year.
“We have carefully assessed our involvement in and outlook for each of the insurance markets in which Tower operates.
"We do not consider that we will be able to achieve the necessary scale or return in this business in the immediate future, and therefore have made the strategic decision to sell Tower Medical Insurance.”
Mark Fitzgibbon, managing director of ASX-listed NIB, said the acquisition was in line with its strategy of expanding into international markets.
“NIB has been investigating opportunities in New Zealand for some time. Tower Medical meets NIB's strict investment criteria in terms of strategic rationale and return on investment,” Fitzgibbon said.
Flannagan said the Tower board was satisfied with the sale price of approximately $102m that had been achieved. It intended repaying capital to shareholders of not less than the proceeds of the sale.
The sale is subject to Overseas Investment Office approval. Settlement is likely before December 31.
Tower said it expects group net profit after tax for the year ended September 30 to exceed the upper end of published analyst ranges.
Net profit after tax is expected to be in the range of $51 million to $56 million.