Tower pays first interim dividend in 8 years

Tower, the insurer part-owned by Ron Brierley's Guinness Peat Group, will pay its first interim dividend in eight years after a turnaround in the value of its equity and property portfolios underpinned a surge in revenue.

Net profit climbed 5.6 per cent to $28.1 million, or 10.88 cents per share, in the six months ended March 31, the Auckland-based company said in a statement today.

As a result of the strong performance, the board will pay a fully-imputed interim dividend of 4 cents per share on July 2, the first since July 2002. The shares gained 3.3 per cent to $1.90 in trading on the NZX today, and have declined 8 per cent this year.

"The company delivered an annualised 13.7 per cent return on shareholders'

funds and will continue its focus on cost reduction, profitability and delivery of good returns to its shareholders," said chairman Tony Gibbs.

The insurer boosted net operating revenue 32 per cent to $269 million in the period, including a $62.8 million gain in investment revenue, which turned around a $9.1 million loss a year earlier.

The big gains came in its equity portfolio, which reported a $20.8 million unrealised net gain compared to an unrealised loss of $38.6 million in 2009, and its property securities, which made an unrealised gain of $2.1 million compared to a $9.7 million loss.

Under international financial reporting standards (IFRS), companies have to include the unrealised changes in value of their assets and liabilities, something that irked many corporate heads, including GPG's Brierley, over the past year as collapsing property and security values eroded their bottom-line profitability.

Managing director Rob Flannagan said the "bottom line result is very robust" and reflected the company's aggressive focus on cutting costs and boosting its customer service in its general and life insurance businesses.

Tower's health & life segment, the company's biggest unit, reported an 8.3 per cent decline in profit to $17.3 million in the six months ended March 31, though earnings in its general insurance unit surged 26 per cent to $11.9 million. Investment earnings fell 11 per cent to $2 million in the period.

Flannagan said the company is looking to expand, and is investigating opportunities that came up in the past few months. With cash assets at $150.6 million, he said Tower is in a "great position to act quickly" if new prospects arise.