TOWER net profit of $34.4m lays foundation for future

26 Nov 2013 

(Auckland – NZ) TOWER Limited has reported a $34.4 million net profit after tax for the full year ended 30 September 2013.

The full year result was impacted by a number of abnormal items related to its divestment programme. It compares to $55.8 million net profit after tax in the previous equivalent period, which included the results for the three businesses that have been sold.

TOWER Chairman Michael Stiassny said the solid performance was pleasing, with TOWER now well positioned as a general insurer.

“Following the divestment of our Health, Investments and Life businesses earlier this year, the transition to a General Insurance business is now complete and a strong foundation for future growth is being laid. This could not have been achieved without significant effort from the entire TOWER team and on behalf of the Board, I would like to thank them for their perseverance.

“Our focus remains on ensuring our shareholders benefit from TOWER’s proven ability to maintain an efficient capital structure while delivering strong returns.  And our policyholders should benefit from initiatives designed to improve service and product offerings,” Mr Stiassny said. 

TOWER Chief Executive Officer David Hancock said that since his appointment in July, he had concentrated on improving the capital structure, refining and implementing the new business strategy and embarking on an organisational change programme.

“The executive team and I have prepared the way for our future growth and we are now starting to execute our refreshed strategy. Our three-pillared strategy is comprised of financial performance, customer satisfaction and staff engagement and we are confident it will enable us to release the untapped potential within the TOWER business.”

Mr Hancock said TOWER was committed to sustainable growth and was already developing a series of initiatives, alongside the transitional support it was providing to the divested businesses. Key areas of focus include customer retention, product bundling and brand positioning. 

Finance and corporate expenses have reduced and there are opportunities for productivity gains to be achieved through further business efficiencies. These would be driven by removing cost from the business and process improvement.  Effective and prudent risk management is another significant area of focus for the business including taking a conservative approach to reinsurance.

TOWER would also continue to evolve its highly-recognised brand, signifying one of New Zealand’s most enduring financial services companies.

Mr Hancock said TOWER was pleased with the progress it was making in settling claims related to the Canterbury earthquake events, with 74% of all claims now settled and closed. 

"Our customers affected by the Canterbury earthquakes are very important to us and we are running at peak resource in this area. We have committed to substantially completing the balance of our claims by the end of 2015, with a small tail of more complex claims.” 

Mr Hancock said TOWER operations outside of New Zealand continued to perform well. 

“We have a well-established presence in the Pacific Islands, and our team has a strong and loyal customer base. Over the past six months we have identified a number of growth opportunities in different markets that we will be exploring.”

With TOWER’s solid underlying performance and strong capital position, the Board has announced an unimputed dividend of 6 cents per share, to be paid on 3 February 2014. This brings the annual dividend to 11 cents per share (unimputed).

Given the planned $70 million return of capital following the sale of the majority of the Life business, TOWER’s dividend reinvestment plan will not operate for the final dividend. A separate announcement has been made as to the form of the capital repayment.