The group's reported profit for the six months ended March was $26.2 million, down from the $27.7 million reported in the previous corresponding period (pcp).
Mr Flannagan told a media conference the $1.5 million fall in profit was not unexpected after Tower changed its business model. Although the profit was down, the recent trend had been one of steady increases.
After including the impact of the Christchurch earthquakes, and the discount rate movement, the profit fell to $13 million, down $15.1 million on the pcp.
A loss of $7.5 million was attributed to the earthquakes, while a loss of $5.7 million was a result of changes in the global investment market which in turn affected the discount rate applied under accounting standards in valuing individual life-risk policy liabilities.
Half-year revenue fell 10.2% from a year earlier to $259.4 million but overall equity increased to $447.2 million.
"Tower is delighted to be announcing this result and to be in such a strong position after providing for more than $350 million of claims for the two major Christchurch earthquakes," Mr Flannagan said.
The full impact of the Christchurch earthquakes could be up to $20 million after tax because of the extra costs of reinsurance.
An unchanged interim dividend of 4c per share will be paid.
Tower chairman Tony Gibbs said the impact of the earthquakes aside, the company performed well across its three businesses, while changing the business model to focus on improving and strengthening its customer service.
It was also encouraging that as a listed company owned by shareholders, Tower was in a strong position to give policyholders assurances that claims made in the aftermath of the earthquakes would be met, he said.
During the period, Tower's KiwiSaver members grew by 11,000 to 93,000 with an increased percentage of non-default members.
Tower was now the sixth-largest KiwiSaver provider, Mr Flannagan said.
Tower also wanted to increase its market presence through acquisition and continued to work on a possible purchase of troubled AMI Insurance.
Last month, the Government announced a "backstop" for AMI, which has been hit by a substantial payout burden resulting from the Christchurch earthquakes.
Under the deal, if AMI's resources run out the Government will make $500 million available for recapitalisation in return for taking ownership of the business.
The big issue with AMI was obtaining information, which Mr Flannagan expected would take a while, with AMI not yet having called on Government back-up.
"They can probably see it coming but it actually hasn't happened."
If it did happen, it would trigger other events, as the Government gained more control.
The outcome would depend on what the Government, which in effect was acting as a reinsurer, wanted to do. Tower would like the Government to continue being the reinsurer.
"The process is just running a course and we're trying to get ourselves entwined into it."
