ASX-listed insurer Suncorp Group has built an 11 per cent stake in Tower and put forward a rival takeover offer for the NZX-listed general insurer.

Suncorp, whose New Zealand brands include Vero Insurance and Asteron Life, bought 18.8 million shares at $1.30 apiece and has made "non-binding indicative proposal" to Tower's board to buy the insurer at the same price, it said. The $24.4 million spent building the stake was funded through Vero's excess capital, it said.

The offer, worth a total $219.3m, trumps a $197m deal already on the table and backed by Tower's board and major shareholders Salt Funds Management and Accident Compensation Corp to sell to Canada's Fairfax Financial Holdings at $1.17 apiece. The Fairfax Financial Holdings transaction would be via a scheme of arrangement, meaning it only requires 75 per cent of votes cast at a special shareholders meeting.

"The proposed acquisition supports our vision to be the number one choice for New Zealanders and our strategy to connect customers to products, services and experiences that enhance and protect their financial well-being," Suncorp New Zealand chief executive Paul Smeaton said in a statement. "The proposed acquisition would consolidate Suncorp's position in the New Zealand general insurance market, creating a business with gross written premiums of $1.6 billion."

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Earlier today Tower chairman Michael Stiassny warned shareholders to tread carefully while the board assessed the rival offer, saying their "primary focus remains to optimise value for our shareholders" and to do so they "need to review and evaluate all options".

The general insurer posted a loss of $22.3m in the September 2016 year as lingering claims from the Canterbury quakes were taking longer and were more expensive to settle. Last year it said it would corral those claims into a separate entity called RunOff, and suspended its annual dividend to preserve capital for the new company. It was also weighing up funding options or finding partners to help with the split.

Stiassny told shareholders to carefully assess the offers in front of them and to seek their own professional advice before making any decisions and reiterated that all policies were unaffected.

Tower shares last traded at $1.135, and have dropped 25 per cent over the past 12 months.