Tower result exceeds estimates

By Phil Boeyen, ShareChat Business News Editor

Tuesday 5th December 2000

Insurance and financial services company Tower (NZSE: TWR) has boosted its first full-year profit as a listed company by 36% to just under $100 million and announced plans to shift its head office operations to Australia.

In the year to the end of September the insurer had sales revenue of $1.72 billion compared with $1.3 billion last year. A final dividend of 14 cents per share has been declared.

The year's result includes an after tax profit of $18.9 million arising from the reinsurance of a portion of the company's term insurance business. Excluding the reinsurance the company says adjusted net profit after tax was $80.8 million, an increase of 10.4% over last year's pro-forma $73.1 million.

Tower says its first year as a listed company was one focussed on exceeding the prospectus profit forecast of $74 million as well as positioning the group to deliver a much greater level of growth in revenue, assets
and profits in the next three to five years.

The company made three important acquisitions during the year - IOOF Trustees, Bridges Financial Services Group and AXA New Zealand Health, and a 25% stake acquired in Financial Services Partners. It has recently said it is interested in buying Aetna's health insurance clients from Southern Cross, which would boost its health business even further.

All group divisions reported income increase with premium income up 13.4%, non-life company operating income up 18.0% and investment income up 93.2%.

Assets under management rose 40% from $15.8 billion to $22.1 billion, and the company says despite the setback of losing several of its Australian equity accounts following the staff defections in January 2000, its Australian equities team has continued to produce excellent returns.

Tower says from early next year its Group MD, James Boonzaier, and other senior executives will move to Sydney as a precursor to making Australia the company's home base, reflecting the fact that most of its business now comes from across the Tasman.

The company says shifting domicile to Australia will also help with the inclusion of Tower in ASX indices, help with future capital raisings, and will allow efficient use of franking credits and imputation credits.

Outcomes from the ASX/NZSE merger discussions currently taking place are likely to have an influence on the timing of any move, and the company says any shift in domicile is unlikely to be before the final instalment on the partly paid shares, due on October 1st next year.

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