Sharechat Logo

Tower posts first-half profit as asset sales reap gains of $51.4 mln

Tuesday 28th May 2013

Text too small?

Tower, the insurer that is 34 percent owned by Guinness Peat Group, has posted a first-half profit after reaping $51.4 million in gains from the sale of its health, life, and investment units that left it as a general insurer.

Net profit rose to $44.2 million, or 19.33 cents per share, in the six months ended March 31, from $23.6 million, or 6.52 cents, a year earlier, the Auckland-based firm said in a statement. Stripping out the gains from the asset sales, the insurer made a first-half loss of $7.8 million from continuing operations, compared to a profit of $6.2 million a year earlier.

The asset sales have released $370 million of capital, of which $120 million has been distributed and a further $114.5 million is expected to be returned to shareholders. The board declared an interim unimputed dividend of 5 cents per share, payable on July 1 with a record date of June 14.

"We have been able to release shareholder value through the period while also preparing the business for its future as a focused general insurer," outgoing managing director Rob Flannagan said. "Tower is well-advanced in its drive to be a focused general insurer offering an attractive alternative to the big Australian brands."

The shares fell 2.3 percent to $1.70 yesterday, and have shed 12 percent this year. The stock is rated an average 'hold' based on three analyst recommendations compiled by Reuters, with a median target price of $1.90.

Tower has been selling assets to transform itself after a strategic review with its major shareholder GPG winding down its own portfolio of assets.

Since November, the insurer has sold its life business to Fidelity Life Assurance for $145 million in cash and liabilities, its investment unit to Fisher Funds for $79 million and its medical unit to Australia's nib for $102 million.

The insurer didn't give guidance for the full year, but said the final result will be impacted by one-off items and the cost of restructuring the group in what's seen as a transition year.

Tower's net operating revenue fell 3 percent to $140.4 million, even as net premium revenue gained 13 percent to $112.1 million.

The firm's New Zealand's general insurance business made a net loss of $8.2 million in the period compared to a profit of $1.7 million a year earlier, even as external premium revenue gained 13 percent to $91 million.

Its Pacific general insurance unit made a loss of $612,000 compared to a profit of $3.7 million, on a 14 percent lift in external revenue to $20.8 million.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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
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