`Business as usual' Tower tells customers

By NZPA

Thursday 7th November 2002

Beleaguered financial services company Tower Ltd has sent a letter to its clients reassuring them it's business as usual, despite last week's profit warning.

Shares in Tower Ltd have been ravaged in the past week since the company warned on Friday it expects to post a full year loss in the region of $30-40 million, rather than the $50-70 million profit expected by analysts.

Further writedowns of its Australian unit, Bridges, could push that significantly higher.

Tower shares closed today at $1.90, compared with $3.55 before Friday's warning. They sank as low as $1.60 earlier in the week.

But the company, New Zealand's second biggest fund manager, said in a letter, dated November 6, that its managed fund, health, life and general insurance businesses remained secure.

"Managed funds investments, for example, are held in separate unit trust structures with their own trustees and are not impacted by Tower's performance," the company said.

"Our insurance business -- including health, life and general -- has sound reinsurance support plus ample reserves, and our ability to pay claims is not called into question by this reported loss."

Tower also moved to reassure clients that the company itself was in a strong position, despite the forecast loss.

"The result of the 2001/2002 year was disappointing, but it is clear that the majority of items causing the loss were one-off in nature, and we are confident that the structure we have in place now sets the business up well for the future."

The company said it expects to return to normal profits in the current financial year.

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