Tower keeps NZ life insurance
Listed insurance company Tower will keep what's left of its New Zealand life insurance business.
The company made the decision to keep Tower Life following an "evaluation of options for divesting the business", it said in a market announcement late this afternoon.
Chief executive David Hancock said Tower had completed a formal process with a number of interested parties and decided it would be better value for shareholder to keep the business.
"Tower believes there are a number of opportunities to continue to improve the business performance of the retained life business, and for a release of capital over time."
During the past financial year Tower sold three businesses realising a total of $370 million, and in doing so had made"significant" cash return to shareholders, the company said.
In May, Tower sold most of its life insurance business to Fidelity Life Assurance for $189 million - a combination of cash and capital release.
Fidelity is a New Zealand-owned company specialising in life insurance, personal protection, business insurance, savings, investment and KiwiSaver.
Under the agreement Tower sold most of its non-participating life insurance policies and keep the capital presently held against those policies, releasing an aggregate amount of capital of $189m.
In addition to the $120m returned to shareholders in April 2013, a further $70m is planned to be paid in January 2014 through an off market voluntary share buy back, Tower said today.
Hancock said the company would continue to look to release capital to shareholders as and when was appropriate.
The buy back offer to shareholders closes January 23.
Tower's shares were trading up 1.1 per cent to $1.77 shortly before market close today.