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Tower's cap policy foils Fiji damage

By Aimee McClinchy

Friday 16th June 2000

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Listed insurer Tower Group managed to escape the brunt of the financial wreckage of the Fiji coup by earlier putting a special capped insurance policy in place.

Tower will lose at the most only $2 million from the Fijian coup where it is the second-biggest insurance company.

The figure would have been higher except for Tower's three-year-old special policy there,which limited liability to $2 million, group managing director James Boonzaier said

On Thursday Tower announced an unaudited net profit after tax of $38.6 million for the six months to March 31, despite what it called "a challenging trade climate."

Mr Boonzaier said the group's restructuring and acquisition of FAI Life had added value, with all divisions apart from risk insurance bettering their profits from the same time last year.

The six-month figure was lower than the $41 million picked by most analysts but almost a $1 million improvement on the previous corresponding period.

But that wasn't necessarily relevant, Mr Boonzaier said. He said the result was not directly comparable to the pro forma results of the previous corresponding period as Tower was then trading as a mutual.

The company declared a dividend of 14c per fully paid share and 7c for each partly paid share.

The announcement had a small adverse effect on Tower's stock price with shares trading down 10c but only on light volumes.

Net premium income for the period was up 32% to $513 million on last year's pro forma results, with net assets rising to $777.2 million from $747.3 million. "The impact of the acquisition of FAI Life was apparent in contributing to a 40% increase in regular and general insurance premiums to a total of $283.3 million," Mr Boonzaier said.

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