Loss-making New Zealand insurer Tower is accelerating the pace of its “strategic transformation” after Friday’s announcement of a $NZ197 million ($187 million) takeover by Canada’s Fairfax Financial Holdings.

The company provided the transformation update on the same day as the announcement of the takeover, which has the board’s unanimous approval and the backing of two major shareholders who collectively own 18.1% of the shares.

Plans to create a new company called RunOff Co, first announced in November, are progressing and awaiting approval from the Reserve Bank of New Zealand.

Shareholders are expected to vote next month on the plan to create Runoff Co, which is dedicated to managing the legacy liabilities from the Canterbury quakes.

Tower has also “further advanced” recovery actions against Peak Re and the Earthquake Commission (EQC).

“Canterbury continues to present a complex and difficult situation for all insurers, claims costs continue to develop caused by additional 'overcap' claims being received from the EQC and growth in the level of litigation and customer disputes,” Tower says.

Other transformation initiatives that were announced in November, including an IT simplification program and partnership with Air New Zealand, are continuing.

Tower expects gross written premium of $NZ77.1 million ($73 million) in the December quarter, excluding the impact of the November quake in Kaikoura. GWP in the corresponding period of 2015 was $NZ78.4 million ($74.3 million).

More details will be provided when the half-year results are released in late May, Tower says.

Tower made a loss of $NZ21.5 million ($20.4 million) for the year ended September 30.

As announced in an insuranceNEWS.com.au Breaking News bulletin last week, the Fairfax takeover is still subject to regulatory approval. The Toronto-based company says the acquisition will give it an immediate presence in the New Zealand market, adding that Tower’s management team will continue to be led by CEO Richard Harding.

Tower was teetering and had to be sold. See ANALYSIS