Tower to buy PrefSure

Fund manager and insurer Tower Ltd has entered into an agreement to buy PrefSure Holdings and Life Ltd from Liberty of South Africa for A$145 million ($161 million).

Tower said the purchase would be funded through existing cash reserves and bank debt.

The company said the purchase price represented a multiple of 1.1 times 2006 embedded value.

According to Tower's group managing director Jim Minto, the purchase would position the company as one of the top five Australian life insurers.

He said the merged entity would have a market share of 11.2 per cent of Australia's life insurance and annual premium income of more than A$540 million.

"The purchase is in line with the group's strategy to grow both organically and through strategic acquisition where unique values can be added," he said.

PrefSure is a specialist life insurance business, with annual premiums of more than A$270 million.

Completion of the deal is subject to approval from regulatory bodies, but is expected to occur on March 31.

Shares in Tower were placed in a trading halt this morning prior to the announcement. They last traded at $2.08, having ranged between $1.73 and $2.40 over the past year.

- NZPA