Tower Insurance Board Recommends Dai-ichi Offer

On the 29 December 2010 Dai-ichi Life Insurance Company Limited (Dai-ichi) made an offer to purchase a 100% stake in Tower Insurance (Australia).

Tower Insurance's 29% shareholder, Dai-ichi Life Insurance of Japan, has offered $4 a share to take out the minorities via a scheme of arrangement. Tower Insurance's Independent Directors have unanimously recommended that shareholders should vote in favour of the offer.

Dai-ichi Life Insurance Takeover Bid

In a letter to shareholders, the Independent Directors said that they believe the offer represents a compelling premium and highly attractive outcome for our shareholders.

Rob Thomas, Chairman of Tower Insurance, said that talks had commenced with Dai-ichi in mid-December, and cited a number of reasons for the decision to move forward with the proposal.

Mr Thomas indicated that upcoming regulatory changes, including APRA's proposals to update the capital standards for general insurers and life insurance companies, were key drivers in the decision.  He also indicated that raising capital would enable Tower Insurance to better service its clients.

"To deliver the best outcome to our customers we need to keep abreast of technology and service and delivery and that is expensive," said Mr Thomas.

The offer is subject to an independent review and Australian and Japanese regulatory approval. A shareholder vote is expected in April.

Source: RiskInfo 2011

February 2011