Tower profit falls, hit by Christchurch earthquake

Friday 27th May 2011

Half year net profit at insurer and fund manager Tower fell 54% to $12.8 million, with the result including the impact of earthquakes in Christchurch and a loss due to changes in the global investment market.

Excluding the earthquake costs and discount rate movement, the company today said its after tax profit for the six months to March 31 were $26.2 million, compared to $27.7 million a year earlier.

A loss of $7.5 million was attributed to the earthquakes, while a loss of $5.7 million was a result of changes in the global investment market which in turn affected the discount rate applied under accounting standards in valuing individual life risk policy liabilities.

Half year revenue fell 10.2% from a year earlier to $259.4 million.

Group managing director Rob Flannagan said Tower had provided for more than $350 million in claims for the two major Christchurch earthquakes.

An unchanged interim dividend of 4c per share is to be paid.

Tower chairman Tony Gibbs said the impact of the earthquakes aside, the company performed well across its three businesses, while changing the business model to focus on improving and strengthening its customer service.

NZPA

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