Tower profit jumps 67 per cent

Last updated 11:47 29/11/2012

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Insurance firm and fund manager Tower has posted an annual net profit of $55.8 million, recovering from a slump caused by the Canterbury earthquakes. 

The NZX-listed company grew its net profit by 67 per cent from $33.4m the previous year, and was not far off its $58.1m result in 2010.

Tower group managing director Rob Flannagan said it was a "strong" result for a company emerging from a particularly difficult period.

The insurer was making industry-leading progress settling claims following the Canterbury earthquakes, he said.

"To date, we have closed almost 60 per cent of claims and have made payments exceeding $200m, with over $3m being paid out every week." 

All four of the Tower group's businesses improved their profits in the full-year to September 30.

The health insurance arm, which made a $13.3m profit, was sold earlier this month to ASX-listed health insurer NIB.

Subject to getting the deal signed off, Tower intends to repay $120m worth of capital back to shareholders. 

The bulk of that sum would come from the proceeds of the sale, while the rest would come from a build-up of "lazy" capital on the balance sheets.

Tower's Life insurance business made a $32.7m profit, up 54 per cent from $21.2m the previous year. 

The less profitable general insurance arm, which was still dealing with the effects of the quakes, made $13.2m, up from $2.5 million last year.

Underlying business continued to grow, and the claims ratio improved.

Tower's investment business turned a $7 million profit.

Funds under management grew by $256m to $4.23 billion over the year, with the KiwiSaver division showing particularly strong growth.

All Tower's results include a provision for discount rate movements, an accounting adjustment based on changes in long-term interest rates which affect profitability.

Without including the discount rate, the group's profit was $46.8m, up 50 per cent from $31m the previous year.

Tower will pay a final dividend of 6 cents per share, bringing the total pay-out this year to 11c.

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