Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Tower 1H profit sinks 70% on year-earlier asset sales

Tower first-half profit sinks 70% as 2013 asset sale gains wash through

By Paul McBeth

May. 27 (BusinessDesk) - Tower, which sold its health, life, and investment units to focus on general insurance, reported a 70 percent slide in first-half earnings, reflecting gains from asset sales a year earlier that weren't repeated.

Net profit dropped to $13.1 million in the six months ended March 31, from $44.2 million a year earlier, the Auckland-based company said in a statement. Tower's continuing operations, which exclude the asset sale gains and remnant life insurance business, made a profit of $10 million, or 4.96 cents per share, turning from a loss of $9.4 million, or 3.5 cents a year earlier, when it increased earthquake provisioning.

Gross written premium revenue rose 5 percent to $139.2 million as rates were driven up by higher reinsurance costs, and total revenue gained 5.6 percent to $148.4 million.The company didn't provide a forecast.

"The result was solid and an indication of the underlying strength of the general insurance business, which had been impacted during the period by a number of severe weather events," chairman Michael Stiassny said. "Tower has made good progress against its key metrics and strategic priorities, and is well advanced in the execution of its core strategy to deliver growth and sustainable shareholder returns."

Tower returned $171.8 million through a voluntary share buyback over the past 13 months after selling various businesses as part of former cornerstone shareholder Guinness Peat Group's exit from the insurer. It retained some life insurance business, which is still for sale and valued at $39.1 million, and is considering potential suitors for the unit.

The board declared an interim dividend of 6.5 cents per share, payable on June 30 with a June 13 record date, up from 5 cents a year earlier.

The shares were unchanged at $1.71 yesterday, and have declined 2.3 percent this year. The stock is rated an average 'hold' based on four analyst recommendations compiled by Reuters, with a median target price of $1.78.

Tower today announced a share cancellation for investors with fewer than 200 shares without incurring brokerage to let small shareholders dispose of their holdings.

The insurer said abnormal weather patterns, including flooding in New Zealand's South Island and,Cyclone Lusi, lifted the cost of large claim events to $4.8 million from $3.3 million a year earlier, and that weather events remain a concern for the rest of the year.

Tower anticipates completing all of its Canterbury earthquake related claims by the end of 2015, having settled 81 percent of its cases. It increased the claims provision by $22.1 million in the period, which are all covered by reinsurance.

The company extended its earthquake reinsurance cover to $585 million with a retention of $10 million, which it said lowered its long-term risk profile.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Leighton-Led WGP To Build, Manage Transmission Gully

The Wellington Gateway Partnership, led by a unit of ASX-listed Leighton Holdings, has won the $1 billion contract to build the Transmission Gully road north of Wellington. More>>

ALSO:

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news