Tower said it will pay $14 million in cash to acquire from ANZ NZ a portfolio of insurance the insurance company already underwrites.
The NZX-listed insurer has provided cover for ANZ and National Bank customers between 1990 and 2009 and continues to cover over 23,000 people under those policies.
Following the acquisition, these customers will be insured directly under a Tower-branded policy and moved to the firm's cloud-based platform.
Chief executive Blair Turnbull said the deal would end future ANZ commission payments on the portfolio. Premiums from the ANZ portfolio contributed $40m in the 2020 financial year to Tower's gross written premiums.
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"We have a tried-and-true method to migrate customers from legacy platforms and products to our new technology, which improves the customer experience and delivers scale efficiencies," he said.
Turnbull said the agreement helped to "solidify our position in the market as a strong and innovative local insurer that is here for our customers".
ANZ said the sale was part of ANZ's strategy to simplify its business.
"We're constantly reviewing our products to ensure they're consistent with our core business," said Ben Kelleher, ANZ NZ Managing Director Personal.
Customers don't need to do anything as a result of this change, he added.