Tuesday 28th May 2013
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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.
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