St George Bank has replaced Tower Australia with AIG Life as its new life insurance partner.

The bank claims the decision to select a one-partner model will support the growth of its life insurance units and address growing levels of underinsurance.

AIG Life will be the insurance partner for Asgard, the bank’s superannuation business.

Tower Australia GM Investor Relations Philippa Ellis says the insurer is disappointed to lose the business but it wasn’t a surprise. She says Tower doesn’t have the bank channel expertise of AIG Life.

“Tower Australia risked losing this business in time if a merged Westpac/St George Bank followed the trend of all other banks and eventually moved the insurance in-house,” she said.

The insurer expects the loss of the Asgard business will have a $60 million impact on its $700 million in-force book.

Meanwhile, the shoe is on the other foot in NZ, where Tower NZ is the protagonist in dumping arrangements with the ANZ-owned National Bank. Tower NZ said last week it has sustained repeated underwriting losses through its revenue-sharing arrangements with the National.

Tower NZ has provided general insurance products to the bank for the past 15 years. The relationship will end next March.