Insurer Tower Ltd has snapped up Youi New Zealand’s insurance portfolio, adding 34,000 in-force policies and $24 million of gross written premium to its portfolio.
Tower announced yesterday that Tower Insurance Ltd has signed a portfolio transfer agreement for the purchase of Youi NZ portfolio, in a deal worth NZ$13 million.
Tower will offer its own policies are current Youi policies expire. The Youi portfolio is weighted towards motor policies, which is complementary to Tower’s portfolio.
The purchase increase Tower’s New Zealand gross written premium by 8 per cent.
The deal will have to be approved by the Reserve bank of New Zealand. Tower plans to raise $47.2 million of capital via a renounceable entitlement offer to fund the acquisition and strengthen the company’s capital position.
The company says it will not pay a dividend this year.
In the 11 months to 31 August, gross written premium in Tower’s core NZ book grew 9.6 per cent, resulting in total GWP increasing to $325.8 million. The claims expense ratio is down 8 per cent to 48.6 per cent over the same period.
The sale will bring an end to Youi’s unsuccessful attempt to establish itself in the New Zealand insurance market. According to stuff.co.nz, Youi was launched in NZ in 2014 and by 2016 its sales tactics led to a Commerce Commission investigation and a fine for misleading customers.
The Commerce Commission said Youi issued insurance policies that people had not agreed to.
The company was also fined by the Insurance Council of New Zealand.