Wednesday 7th August 2013
|Text too small?|
Shares in Tower fell to a two-month low after the insurer gave more guidance on its licensing requirements, raising concerns it may have to hold more cash on its balance sheet.
The stock fell 3.2 percent to $1.79 after the Auckland-based company yesterday said it needs a minimum solvency margin of $80 million above minimum solvency capital from Aug. 16 to meet the terms of its insurance licence under new prudential supervision laws.
Chief executive David Hancock said the insurer has the funds available to meet the minimum margin due to the sale of most of its life insurance to Fidelity Life Assurance, and is now reassessing its capital management plan.
"The feedback is that they have to hold more capital on the balance sheet," said Rickey Ward, head of equities at Tyndall Asset Management. "They've sold a number of assets and most investors expected the proceeds to come back to shareholders, so it's created another level of uncertainty."
Tower made the statement after the close of trading yesterday after concluding discussions with the Reserve Bank over its licensing conditions.
In its first-half report, Tower said it will have more than $127 million in capital above minimum solvency requirements after repaying its bonds and making a capital return. As at Sept. 30 last year, Tower Insurance had a solvency margin of $39 million, according the company's annual report.
Guinness Peat Group is looking to sell its third-stake in the insurer as the investment firm liquidates its portfolio, and rebrands as UK threadmaker Coats, its biggest asset. GPG shares rose 0.9 percent to 56.5 cents.
NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.
No comments yet
Tower to return 'initial' $70M of capital from sale of life business
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
Tower lifts premiums for house, contents and motor cover