TOWER net profit of $44.2m

28 May 2013 

(Auckland – NZ)  TOWER Limited has reported a $44.2 million net profit after tax for the half year to 31 March 2013. 

The period saw the completion of a strategic review of operations, with TOWER now repositioned as a focused General Insurer.  In total, the sale of its Health, Investments and Life businesses will release capital of $370 million*.  Of this, $120 million has already been distributed and it is intended that a further $114.5 million will be returned to shareholders once the Life sale has been completed.  At that time, TOWER bonds of $81.8 million will also be repaid.

Group Managing Director, Rob Flannagan said the half year results are pleasing as the company commences its new direction: “This is a new era for TOWER.  We have been able to release shareholder value through the period while also preparing the business for its future as a focused General Insurer. 

“Our General Insurance business delivered a solid performance for the period and after all capital returns is exceedingly well capitalised, having more than $127 million in capital above minimum solvency requirements*.  TOWER is now strongly positioned to concentrate on being a simpler, dynamic and more agile business in a sector that is poised for growth,” Mr Flannagan said.

TOWER has increased its provisions for the February 2011 Christchurch earthquake by a further $14.2 million after taxation, driven by higher levels of inflation, the difficulty and delays in obtaining EQC data and new claims. 

"TOWER is well advanced in its drive to be a focused General Insurer offering an attractive alternative to the big Australian brands,” said Mr Flannagan.

TOWER Chairman, Michael Stiassny said: “In our 144 year history, we’ve proven our ability to adapt and evolve in order to thrive and deliver significant value to our shareholders.  On settlement of the Life sale we will have successfully concluded our strategic review and will concentrate on TOWER being a leaner, focused General Insurer.”

With TOWER’s solid underlying performance and strong capital position, the Board has announced an unimputed dividend of 5 cents per share for the six months to 31 March.  In addition, TOWER will adopt a dividend policy payout ratio of 90-100% of NPAT for the future.  With the return of $114.5 million capital intended following the Life sale, TOWER’s dividend reinvestment plan will not operate for the interim dividend.

* Following settlement of the Life sale which is subject to conditions including regulatory approval.