trending Market Intelligence /marketintelligence/en/news-insights/trending/QIOiWDkodSikgv93nIUq4A2 content esgSubNav
In This List

Tower to acquire Youi NZ's in-force policies, raise capital

Blog

The Big Picture 2022 Insurance Industry Outlook

Podcast

Next in Tech | Episode 37: Insurance impacts on technology and vice versa

Case Study

A Prestigious Global Business School Gains a Competitive Edge

Video

S&P Capital IQ Pro | Unrivaled Sector Coverage


Tower to acquire Youi NZ's in-force policies, raise capital

Tower Ltd. announced that Tower Insurance Ltd. has signed a portfolio transfer agreement to buy approximately 34,000 of reinsurer Youi NZ Pty. Ltd.'s in-force policies for a total purchase price of NZ$13 million.

Under the agreement, Tower Insurance policy renewals will be offered as existing Youi NZ policies expire. The total purchase price represents an 8% increase on the company's current New Zealand gross written premiums.

The transaction is anticipated to close before the end of 2019, subject to regulatory approvals and other conditions, such as approval from the Reserve Bank of New Zealand. If the deal pushes through, customers of Youi NZ will still be covered under their current terms for the rest of their contract.

Additionally, the Reserve Bank of New Zealand changed Tower Insurance's license conditions to remove from its solvency calculations a NZ$70 million receivable that it has been claiming from the Earthquake Commission, effective Oct. 31.

Tower will raise NZ$47.2 million in capital through a pro rata renounceable entitlement offer at a ratio of 1 new share for every 4 existing shares held at an issue price of 56 New Zealand cents, or 54 Australian cents for eligible Australian shareholders. The purpose of the capital raise is to ease the license condition change and support the acquisition of Youi NZ's insurance portfolio.

Additionally, Tower raised its guidance for the full year, now anticipating full-year underlying net profit after taxes of roughly NZ$28 million, subject to normal volatility in claims expense and no further occurrence of large events.

Youi NZ is a subsidiary of South Africa-based Rand Merchant Investment Holdings Ltd.

As of Sept. 23, US$1 was equivalent to NZ$1.59.