Sharechat Logo

Tower downgrades profit guidance, completes strategic review

Tuesday 4th September 2012

Text too small?

Tower, the insurance company that's about one third owned by Guinness Peat Group, has downgraded its annual profit expectations because of the impact of Christchurch earthquake claims and concluded a strategic review.

The Auckland-based company said market expectations of profit for the year ending Sept. 30 should be reduced by $9.4 million "to take into account increases in claims provisioning relating to the February 2011 event."

Tower made a profit of $33.4 million a year earlier and the downgrade amounts to a one-time impact of 3.5 cents a share, it said.

Tower's reinsurance cover hasn't been used up but ongoing notification of claims, together with an "appropriate" risk margin and allowing for inflation would "bring total claims and provisions over Tower's $325 million of cover," it said.

Tower increased its reinsurance cover to $500 million per event after the Christchurch earthquakes.

The insurance company also said it has completed its strategic review which began earlier this year. The review included an evaluation of Tower's capital structure, its health, life, investments and general insurance units and strategic acquisition and divestment opportunities. It will provide more information on the review next week, managing director Rob Flannagan said.

Tower's shares last traded at $1.84 and have gained about 20 percent this year. The stock is rated 'hold' based on the consensus of five analyst recommendations compiled by Reuters.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Tower to return 'initial' $70M of capital from sale of life business
Tower shares fall to 2-month low as licensing requirements may weigh on capital returns
Tower's licensing talks with RBNZ may push up minimum solvency requirements
Tower names Hancock as new chief executive, replacing Flannagan
Tower posts first-half profit as asset sales reap gains of $51.4 mln
Fidelity Life acquires most of Tower's life insurance business
Flannagan to leave Tower after strategic review, asset sales
Tower FY profit jumps 67%, to return $120M to shareholders; shares jump
Tower sells medical insurance unit to nib for $102M
Stiassny joins Tower board as questions linger over strategy