Turners Limited, the listed finance lender taken over by Dorchester Pacific last year, has acquired the first of a number of small insurance companies as it looks to triple the size of its insurance business over the next two years.
The Auckland-based lender's wholly-owned insurance subsidiary, DPL Insurance, has bought Greenwich Life Insurance's business assets for an undisclosed amount, following Reserve Bank approval and its in-force policies have been transferred over. The acquisition won't have a significant immediate impact on profit for Turners.
DPL Insurance, which has a B+ insurance rating, underwrites a range of life and non-life consumer insurance products and will continue to offer funeral cover, accidental death, and quick-cover plans under the Greenwich brand.
The acquisition gives DPL Insurance access to the distribution expertise of DirectLine, an agency specialising in selling New Zealand insurance products, although it will continue to be independently owned and operated.
Turners chief executive Paul Byrnes said the transaction was attractive to both parties, with Greenwich Life relieved of increased compliance costs and minimum capital requirements under the current regulatory regime while DPL gets more scale in the types of policies it wants to grow in.
Byrnes said the two streams of insurance DPL wants to concentrate on include "light" life such as funeral plans and accidental death where the policies are short-tail and low risk, and also in the motor vehicle space for car, breakdown, and loan repayment insurance.
Byrnes said it was also in talks with another small insurance player and hoped to acquire more.
"At this point we consider our insurance business to be subscale," Byrnes said. "If we look at our other businesses they are around $4 million earnings before interest and tax on an annual basis while DPL is around $2 million and we want to see it grow to around $5 million in a couple of years."
The March 2014 annual accounts for DPL Insurance show it wrote premium revenue of just under $3 million with a net profit of $1.15 million.
Turners shares last traded at 31.5 cents, and have fallen 1.6 percent since the start of the year.