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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news