Tower shareholders are in for a windfall of up to 55c a share
as the insurance company returns a total of $114 million in
capital, with $70 million being paid out in the first
Craigs Investment Partners broker Chris Timms said the
company had previously indicated it would return the capital
but there had been no details on timing or the amount.
Tower had indicated the first tranche of 34c a share would be
paid ''as soon as practicable'' and the remaining 21c would
be paid when ''appropriate''.
Tower is 34% owned by Guinness Peat Group.
It sold its life business to Fidelity Life Assurance for
about $145 million in cash and liabilities in May.
In determining what capital was available, Tower had to take
into account the Reserve Bank's requirements for its
insurance licences, including an increase in its minimum
Last month, Tower said it had concluded talks with the
''We continue to review our capital management plan following
the issue of full licences for our general insurance and
retained life insurance businesses,'' Tower chief executive
David Hancock said in a statement.
''With minimum solvency margin requirements now confirmed, it
was appropriate that some capital realised from the execution
of Tower's strategic review, and which was surplus to capital
and business requirements, was returned to shareholders.''
It was now appropriate for some capital to be returned to
shareholders, he said.
Mr Timms said the share price had fallen from its high of
more than $2 in July last year and had recently been trading
around $1.80. It last traded up 1.1% to $1.83.
''I expect we will see a bit of buying as people look for the
distribution, similar as we see the buying into the
Asset sales had released $370 million of capital, of which
$120 million had already been distributed.
GPG stood to get about $24 million from the life business
sale, he said.