Tower trading ahead of 2008 in first four months

Tuesday 17th February 2009

Tower's trading in the first four months of the year is ahead of the year-earlier period, helped by a slide in interest rates, which has allowed the group to revalue policyholder liabilities.

"I the current very challenging economic climate the board is pleased with this performance," chairman Tony Gibbs told shareholders at their annual meeting today.

Tower lifted 2008 profit by 17% on earnings from health and life insurance, and raised its dividend to 8 cents from 6 cents. Gibbs said today that investors have endorsed the company's performance, with holders of more than 33% of eligible shares opting to take more stock in lieu of dividends.

"Provided our profit targets are met, it is the board's intention to continue paying an annual dividend after the end of each financial year," Gibbs said.

Shares of Tower rose 2% to $1.53. In the past three months the shares have gained 4%, outpacing the NZX 50 Index, which fell almost 2%.

The insurance and investment management company this month offered to sell as much as $100 million of five-year bonds paying 8.5% interest, taking advantage of investors' appetite for high yields as deposit rates fall.

Buyers for the initial $80 million of bonds were lined up before the offer opened on Monday. Proceeds will be used to repay maturing debt, provide working capital and upgrade Tower's computer systems.

By Jonathan Underhill

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