Major changes at Tower

He says the company is redefining its business: "We now believe the core definition of our business should be a focus on wealth management (savings and investment), providing a broader range of products, possibly through a network of strategic alliances."

The changes are in response to an increasingly competitive financial services market, Boonzaier says.

"Australasia is arguably the second most sophisticated financial services market in the world after the US.

"It's become more competitive with mergers, new players coming in, and banks and insurance companies getting together."

The company sees a major opportunity for growth in a series of alliances with credit unions here and across the Tasman, and it is shortly to appoint a new chief executive for that arm of its business.

The move is one of four management changes. Current managed funds managing director Stuart Fish is to move to Sydney and become the company's restructuring supremo.

The current Tower Group chief operating executive, Ken Boag, is to take charge of marketing and distribution across the company's various distribution channels in Australia, while the company's new New Zealand chief executive is Jim Minto.

Boonzaier will now spend half his time in Wellington and the other half in Sydney.

"With Jim Minto taking over the New Zealand operation I will then have more time to focus on growth opportunities in Australia."

The restructuring will probably involve shedding some parts of its business the group is seen as being too diversified and requiring much better focus but it is not clear yet how it will do this.

"Although we have a very clear idea about what needs to be done, we are less clear on how to go about it at this stage," Boonzaier says.

"We need to talk the issues through more internally and with our partners. That's a vital part of this process."

As part of the move Tower its expected to move its registered office from Wellington to Sydney.

Shareholders will vote on whether to relocate to Sydney later this year. While Tower's top table are carefully non-committal on which way the vote may go, shareholders are widely expected to opt for a move.

A shift would probably boost Tower's share price, Boonzaier says. He says such a move would allow the company to better utilise its franking credits.

Also there is the advantage of being closer to the company's largest group of customers.

As for the company's performance in the year just gone, Boonzaier described it as "a good performance in a stormy year".

Tower posted a profit of $77.2 million in the 12 months ending September 30, which is 22% lower than last year's profit of $99.6 million. However, last year's result included a one-off gain of $18.9 million. When this is stripped out this year's result was just 4% lower.

Profits from operations rose from $64.4 million to $78.5 million, which helped offset a poor year for returns. Tower Savings and Investment reported a 10.5% increase in profit to $73.9 million, while Trustee Services' profit rose nearly 32%, to $9.6 million.

The events of September 11 had only had a slight impact on Tower, Boonzaier said.

"There hasn't been much direct impact, although we have a lot of travel business and that was slightly affected. There might be some long term impact around re-insurance but it's not clear yet."

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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