New Zealand insurer Tower has offloaded funds management business Tower Investments to Fisher Funds for $NZ79 million ($63.78 million).

The company’s move is part of a plan to narrow its corporate focus following a strategic review last year.

Tower “got a good price for the business in terms of earnings multiple and as a percentage of funds under management”, according to John Cairns, an insurance analyst with stockbroker Forsyth Barr.

The sale was carried out on an earnings multiple of 11.3 and 1.9% of funds under management, Mr Cairns told insuranceNEWS.com.au.

“The decision to sell Tower Investments was made as a result of a comprehensive strategic review of what… would provide value for shareholders,” Tower MD Rob Flannagan said.

“When we did our strategic review we did have a lot of enquiries from people wanting to buy bits and pieces and so we’ve been investigating those to see if they’re real or otherwise,” Mr Flannagan told insuranceNEWS.com.au.

“It’s certainly a possibility that some more parts of the business may be sold.”

Of the $NZ4.3 billion ($3.47 billion) of funds under management in the deal, about $NZ700 million ($565.11 million) is Tower’s insurance reserves, with $NZ800 million ($64.58 million) in KiwiSaver retirement accounts, $NZ1 billion ($807.3 million) in wholesale funds and $NZ1.8 billion ($1.45 billion) in retail funds.

Fisher Funds has agreed to manage the insurance reserves for five years. It had just $NZ1.4 billion ($1.13 billion) under management before the deal.

New Zealand bank TSB announced it has bought 26% of Fisher to help finance the acquisition.

“In seeking a partner TSB was the obvious choice,” Fisher Funds MD Carmel Fisher said.

The deal follows the sale in November of Tower’s health insurance business to Nib for $NZ102 million ($82.34 million).

Fisher Funds will retain Tower’s 69 funds management staff and can use the Tower name for a year. It is now New Zealand’s fourth-largest funds manager, with a 10% market share.

Tower shareholders will be asked to approve a $NZ120 million ($116.25 million) capital return at the annual general meeting on March 21.