Premium increase boosts Tower profit
An increase in premiums, a reduction in claims and a near doubling of investment income have helped Tower increase its profit by 67% as it bounced back from an earthquake-hit 2011.
Thursday, November 29th 2012, 11:27PM
by Niko Kloeten
The listed insurer and fund manager recorded a net profit after tax to $55.8 million in the year to September 30, up from $33.4 million last year.
Meanwhile, it has announced it will return $120 million to shareholders following the recent sale of its medical insurance business to Australian firm NIB.
Tower Medical Insurance, recorded in discontinued operations, recorded a profit of $13.3 million for the year, up from $9.6 million last year.
In Tower’s other businesses net premium was up 15.6% to 272 million from $235.3 million, with general insurance premiums increasing by 15% to $238.9 million and life premiums up 5.9% to $94.2 million.
Tower’s chief operating officer Michael Boggs said earlier this year the increase in premiums had been a mixture of both higher prices and a larger number of customers.
Overall claims expenses were down more than half, from $599.2 million to $253.9 million, while total life claims were down 11.4% to $85.8 million.
Investment revenue increased by 86% to $119 million from $62.8 million, driven by a big reversal in equity securities, which saw a gain of $25 million after losing $8 million the previous year.
“Other” securities including derivatives also performed strongly, nearly doubling last year’s performance with a net unrealised gain of $51.7 million.
Fixed interest securities ($5 million) and property securities ($10.5 million) both lost money during the year.
Investment and management fees fell slightly to $31.4 million from $33.8 million last year, despite the investments business continuing to grow with funds under management now more than $4.2 billion.
"The result reflects improved performance across all business units, compared with the same period last year," Tower managing director Rob Flannagan said. "The group is recovering well from the Canterbury earthquakes."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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