Directors of Fidelity Life Assurance Company are recommending shareholders take no action at this stage after insurer Tower said it will make an unsolicited cash and scrip takeover offer for all of Fidelity.

Tower said it has given notice of an intention to offer $82 per Fidelity share, comprising $55 in cash and $27 in Tower shares. The bid values the target at $118 million.

Fidelity was founded by Gordon and Shirley Watson in 1973 with a vision of a New Zealand owned and controlled life insurance company. It provides life insurance, personal protection, business insurance, and savings and investment products in New Zealand, including KiwiSaver products.

Fidelity said the approach from Tower was unsolicited. As required by the takeovers code, the board was evaluating the takeover notice and was seeking detailed professional advice. It would engage an independent financial adviser.

Fidelity also said it increased its net profit by 63 per cent to $16.9 million in the year ended June 30 from a year ago. The company declared a dividend of $1.47 a share, up from $1 last year.

Fidelity said its New Zealand heritage, ability to react quickly to market trends and the excellent relationship with more than 1000 independent life insurance advisers were keys to its success.

The offer is conditional on a 90 per cent level of acceptances and on certain other matters being confirmed in respect of Fidelity's financial position.

"Bringing together these two iconic New Zealand controlled life insurance companies underscores the service each has provided to New Zealand policy holders over a long period, and will reinforce their ability to compete in an industry where most players are overseas owned," said Tower chairman Tony Gibbs.

Tower has based its offer on publicly available information and will ask Fidelity for access to certain additional information.

"Tower is hopeful that this request will be positively received by the directors," Tower said. Goldman Sachs & Partners is advising Tower.

Tower shares rose 4c to $1.84 on Friday.

The earliest that Tower can formally make the offer is October 15.