Youi has agreed to sell its New Zealand home, contents and motor portfolio to No. 3 insurer Tower for $NZ13 million ($12.05 million).

The move, which is subject to regulatory approvals, marks Youi’s exit from a market where it has struggled to recover from widespread accusations three years ago of dodgy sales practices and shoddy treatment of customers.

In January 2017 the South African-owned insurer was fined $NZ320,000 ($296,644) after pleading guilty to engaging in unscrupulous sales practices between July 2014 and February 2016, which saw customers billed for unsolicited policies.

The Insurance Council of New Zealand (ICNZ) also fined Youi a maximum $NZ100,000 ($92,701) in 2016 for misconduct.

Now Youi says it’s pulling out of New Zealand because the Australian market presents better growth opportunities, and will sell its 34,000-policy portfolio to Tower.

“We have decided to step back from this market,” Youi CEO Hugo Schreuder said today.

“While we’re very proud of what we’ve achieved in New Zealand over the past five years, there will be more growth opportunities for the portfolio under Tower’s ownership.

“This decision now allows us to put all our focus and energy on our Australian business as the scale and diversity of the market offers more growth opportunities for a challenger brand like Youi.”

Tower CEO Richard Harding says the acquisition accelerates his company’s growth ambitions.

“We are now firmly positioned as a challenger brand focused on delivering good customer outcomes and value for our shareholders,” he said.

In 2017 Tower was subject to a takeover bid by Suncorp, but Suncorp pulled out after New Zealand’s Commerce Commission blocked the deal over competition concerns.

ICNZ told insuranceNEWS.com.au today that it has no concerns with Youi’s proposed exit.

“The recent announcement of a proposal by Tower Insurance to acquire Youi New Zealand’s book represents about $NZ24 million ($22.25 million) GWP, according to material released by Tower today,” ICNZ CEO Tim Grafton said.

“Most of the book is motor insurance. These changes in a multi-billion dollar market do not raise concerns about a reduction in competition as the motor, house and contents market has several companies actively competing within it to the benefit of customers.”