A Forsyth Barr analyst says Tower Limited's $189 million sale of most of its life business to Fidelity Life was at a 21.5% discount to his valuation.
John Cairns says the embedded value of the business, which was sold at the end of September, was nearly $220 million, which included tax credits which had no value to Fidelity, and he had valued it at nearly $242 million.
Tower had earlier sold its investment business.
Mr Cairns says Tower's remaining principal activity is a sub-scale general insurance business.
He says to reflect this now largely stand-alone business, Tower will need to inject additional capital to ensure it has a robust buffer over and above minimum solvency requirements.
He estimates Tower will put a further $60 million into the general insurance business but he questions the merits of the company retaining this business.
He estimates Tower will return about $100 million to shareholders or about 50 cents per share.