Tower recovers well; pays 6c dividend

Tower shareholders will be rewarded for the company's much improved profit through an increased dividend payment and a capital return of about $120 million, the company announced yesterday.

Tower reported a profit before tax of $78 million for the year ended September, compared with a profit of $45.4 million in the previous corresponding period.

The after-tax profit was $55.8 million, up 67% on the $33.4 million in the pcp.

The final dividend of 6c a share takes the total dividend for the year to 11c, compared with a 6c total dividend last year. The dividend reinvestment plan would not operate and all shareholders would receive their dividend in cash.

Group managing director Rob Flannagan said the results reflected improved performance across all business units.

Strong revenue growth was reported by the life, health and general insurance businesses and there was a drop in the level of insurance claims.

Premium income growth for the health business countered the impact of claims' inflation, while price increases in general insurance policies covered rising reinsurance costs.

The investments business continued to grow. Funds under management surpassed $4.2 billion, he said.

"The group is recovering well from the Canterbury earthquakes and the strong financial performance highlighted the benefits of its streamlined and cohesive operating structure which included business-to-business alliances and partnerships with distributors."

The year's financial results included further claim costs associated with the earthquakes of $13.6 million after tax, Mr Flannagan said.

The board had recommended capital return to shareholders of $120 million - subject to court and shareholder approval.

The repayment of capital would be made up from the proceeds of the sale of the health businesses and existing surplus capital.

Activities for the current financial year would focus on six key initiatives: customer retention, distribution, interaction with advisers, KiwiSaver, product simplification and pricing, he said.




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