TOWER profit pleasing despite earthquakes

27 May 2011

(Auckland – NZ): TOWER Limited today reported a pleasing financial result for the six months to March 31 in the wake of the Christchurch earthquakes and will pay an interim dividend of 4 cents per share on 4 July 2011. The dividend will be fully imputed and matches the interim dividend paid for the same period the previous year, which was the first interim dividend paid since July 2002.

Excluding costs associated with the earthquakes in Christchurch and the discount rate movement, TOWER reported an after tax profit of $26.2 million compared with $27.7 million for the corresponding period a year earlier.

After the impact of the Christchurch earthquakes and the movement in the discount rate the net profit for the half year to 31 March 2011 was $13.0 million, down by $15.1 million on the previous year. However, overall equity increased to $447.2 million.

Group Managing Director, Rob Flannagan, said “TOWER is delighted to be announcing this result and to be in such a strong position after providing for more than $350 million of claims for the two major Christchurch earthquakes.”

“TOWER takes a prudent approach to insurance and risk management and it has been business as usual for all three of TOWER’s operations: Health & Life, General Insurance and Investments.”

TOWER Chairman Tony Gibbs said “the pleasing financial result was achieved under challenging circumstances but TOWER has once again demonstrated the merits of maintaining a strong balance sheet and the value of proactively managing risks and investments.

“The impact of the Christchurch earthquakes aside, TOWER performed well across its three businesses, whilst changing the business model to focus on improving and strengthening its customer service,” Mr Gibbs said.

“TOWER is a well established company with origins stretching back to 1869 and during the reporting period has reinforced its position as a market leader in providing products and services in insurance, investments and KiwiSaver,” he said.

“It is also encouraging that as a listed company owned by shareholders, TOWER is in a strong position to give policyholders assurances that claims made in the aftermath of the Christchurch earthquakes will be met,” he said.