Tower chairman resigns as profit update revealed

Tower, the insurer controlled by Guinness Peat Group, says annual earnings are likely to meet analyst estimates this year, while chairman Tony Gibbs resigned.

The insurer expects its general insurance business to stay profitable, with group profits of between $22 million and $28 million in the 12 months ended Sept. 30, the Auckland-based company said in a statement.

Managing director Rob Flannagan said it was still negotiating with reinsurers to reinstate its catastrophe cover for next year, and expects higher premiums as a result.

Last month, the insurer said it expected increased costs of between $22 million and $26 million as a result of the Canterbury earthquakes, having previously flagged extra costs of as much as $31 million on June 23.

Flannagan also announced Gibbs' resignation from the board, and said independent director Bill Falconer will take over as chairman.

Gibbs held the chair since 2006 when the Australasian businesses were separated, and acted as GPG's representative until last year. He stepped down from GPG's board after going public over disagreeing with the investment company's plan to carve itself up along regional lines.

GPG has since installed former Westpac Institutional Bank chief Mike Allen to the Tower board, as it looks for ways to exit its holdings.

Because GPG owns more than 20% of Tower, any sale would demand either a full takeover offer or an exemption from the Takeovers Panel.

The shares rose 1.5% to $1.38 in trading today, and have dropped 35% this year.