NZX-listed insurer Tower is to pay $5.2 million to acquire TSB's insurance portfolio which it already underwrites.

The move is the latest by Tower to build up its business after previously acquiring Youi New Zealand, Club Marine and ANZ's insurance business.

Tower has provided insurance to TSB customers since 2004. Those 18,000 customers will now move to sit under Tower Direct.

It has also signed a five-year agreement for TSB to continue to refer its customers to Tower for insurance.

Tower chief executive Blair Turnbull said the new acquisition followed its other purchases which were delivering growth and efficiencies.

Premiums from the TSB portfolio contributed $11m to its FY2021 gross written premiums.

The deal is expected to be completed on July 1, 2022.

Tower also purchased a small Westpac legacy portfolio in February for $560,000.

"Both transactions are further examples of Tower leveraging its unique
partnership model and scalable technology platform, to provide simpler and easier
experiences for its customers and partners."

Tower's share price was flat on the news. It is down 5.25 per cent or 3.8 cents over the year to 68.5 cents per share.