Life insurers will know bidder soon

Transtasman insurer and financial services company Tower Group will soon know if it has gained Australian life insurance business PrefSure.

The successful bidder will be announced within two to three weeks.

Tower chief executive Jim Minto said the company could not discuss the sale process but he reiterated that Tower did not deny it was bidding.

PrefSure's Johannesburg-listed parent, Liberty Group, put the company up for sale last November.

Prospective buyers are believed to include US giant MetLife, Promina's life unit, Asteron, UK group Aviva, AMP, Axa, the Commonwealth Bank, National Australia Bank's wealth management arm and MLC.

Liberty reportedly hopes to attract a bid of more than A$150 million (NZ$163 million) but some have suggested Liberty's price expectations may be deterring potential bidders.

Minto said Tower would not go out of its way to pursue acquisitions.

"We've got a good business and a good growth story in Australia without an acquisition, it's not as though we have to do anything," he said.

"Our rules about acquisitions are that we would only look at something if it added some particular dimension, gave us a stronger competitive position or put us into a market segment we weren't quite so strong in."

Life insurance market share figures show Tower's growth in Australia outstrips the wider market.

Premium inflows across the market in the 12 months to September were up 11.9 per cent but Tower's were up by 22 per cent. Sales of risk business grew by 9.4 per cent while Tower's grew by almost 43 per cent, though off a comparatively low base.

Tower Australia's September year net profit rose by 51 per cent to $35.1 million thanks to strong growth in life insurance sales.

In its analysis of the data Credit Suisse said yesterday that Tower's continued strong growth in the Australian life market "highlights the validity of its business model of being a risk specialist".

The growth "should lead substantial profit growth if it can realise its pricing assumptions".

Tower shares climbed 6c to close at a three-month high of $2.19 yesterday.

GROWTH STORY

* Tower's life insurance sales rose 42.6 per cent to A$84.7m in the year to September against the wider market's 9.4 per cent gain.

* Premium inflows rose 22 per cent to A$271.3m.

* Tower now has a 5.6 per cent share of the Australian life insurance market.