Is life insurer Tower Australia setting itself up for takeover by its larger Australian competitors? That’s one suggestion around the market following the company’s $145 million takeover of South African-owned PrefSure Holdings. And CEO Jim Minto seems happy to agree.

Still subject to regulatory approval, the PrefSure deal will see Tower become one of Australia’s top five life insurers. It’s a big turnaround for the New Zealand-owned operation. Its Australian operations suffered near catastrophic losses of $60 million and asset writedowns in 2002.

Mr Minto was the driving force behind the company’s recovery. Under his stewardship, the company has cut its cost base by $32 million and made sweeping changes to its insurance risk and remuneration policies.

It returned to profitability with a 79% rise in net earnings for the 12 months to September 2005.

Mr Minto says Tower’s strategy has got to be to restore shareholder value as quickly as possible and one way to increase that value will be to raise the interest of an even bigger player.

New Zealand analyst James Smalley says Tower may be positioning itself as an acquisition target. “[The PrefSure acquisition] does make them a larger, more attractive takeover target, further down the track, for one of the bigger Australian players.”