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Suncorp sells Tower stake

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Suncorp-owned Vero Insurance New Zealand has sold its 19.99% stake in Tower to global credit specialist Bain Capital Credit for $NZ53.9 million ($50.2 million).

The sale follows Suncorp’s unsuccessful bid to acquire the loss-making insurer for $NZ236 million ($220 million) last year.

Suncorp New Zealand will record an $NZ8.5 million ($7.9 million) gain in the second-half of the financial year. In its half-year results, Suncorp recorded “market-to-market” losses of $NZ12 million ($11.2 million) from its Tower shareholding.

Meanwhile, AM Best says Tower’s credit ratings are no longer under review with negative implications following a strengthening of the company’s capital base through a share offer.

The ratings company says Tower has completed a capital raising of about $NZ65.3 million ($59.4 million) and has entered into a settlement agreement with Peak Re.

It affirmed the Tower financial strength rating as A- (Excellent) and said a strong balance sheet was supported by conservative underwriting leverage, a prudent reinsurance program and highly liquid investment portfolio.

“AM Best’s announcement confirms the board and management’s view that Tower’s underlying business is strong and that significant potential exists in its transformation,” Tower Chairman Michael Stiassny said.