A technical error meant 23,000 customers were overcharged by the insurance company.
Fidelity Life Assurance has acquired most of Tower's life insurance business for about $145 million in cash and liabilities, propelling the closely held company to the third-largest in the market.
Fidelity, whose businesses include life insurance, business insurance and KiwiSaver, is acquiring most of Tower's non-participating life insurance. The Auckland-based
company has a strategy of growing organically and through acquisitions, though assets such as Tower's life business "don't come along very often," said chief executive Milton Jennings.
Tower announced the details in a statement to shareholders this morning.
Jennings declined to comment on how Fidelity is funding the deal. Tower put a total "aggregate" value on the sale of $189 million including the release of capital. The actual total incurred by Fidelity of $145 million, made up of about $70 million in cash and the balance in transfer of liabilities, was confirmed by Fidelity chief financial officer Ed Eadie.
Tower's shares rose 4.7 per cent to $1.79, the highest since April 22.
