The loss of St George life insurance business would result in an 8 per cent loss, or $60 million, from Tower Australia’s current $700 million in-force premiums book, the insurer has warned.
The loss of St George’s mandate, as exclusively reported in Money Management earlier this week, would also have an adverse impact of $4 million on Tower’s annualised contribution margin, it said, to be mitigated by associated cost reductions over the 2008-09 financial year.
While Tower acknowledged it was “disappointed” by St George’s decision to appoint a new life insurance partner, it anticipated that there would be “no profit impact in the 2008 year and a part impact in 2009, depending on when the transition takes place”.
Tower also acknowledged St George’s decision was not “unexpected”, acknowledging that it “does not have bank channel expertise, a quality St George was looking for in a life insurance partner”.
