Tower posts solid result

Tower Australia Group has defied ongoing market volatility to post a 69 per cent increase in net profit to $68.7 million, with a 14 per cent increase in underlying profit to $67.9 million.

The result has seen shareholders rewarded with a 13 per cent increase in dividend of 4.5 cents per share fully franked.

Commenting on the result, Tower managing director Jim Minto said as a company which specialised in the life market sector, Tower had been able to lift its financial returns and strengthen its competitive position while successfully managing its capital and debt in a period of financial turbulence.

He said the company’s post-balance date acquisition of InsuranceLine would help underpin Tower’s strategy.

“It has strengthened the company’s competitive position in the direct life insurance channel while the Tower Australia balance sheet has remained strong and gearing has stayed low,” Minto said.

He acknowledged companies in some global life insurance markets had seen significant losses over the past year but claimed the Australian market was different to these.

“Life insurance in Australia is generally a non investment contract providing pure risk into protection whereas in some other markets, investment based contracts are common as are guaranteed return products,” Minto said. “These types of product have caused large losses overseas.”