New financial regulations should help Tower, investors told

Tower chairman Tony Gibbs. Photo / Greg Bowker.

Tower expects changes in regulations for the insurance and financial services industries to be good for its risk insurance and wealth management business, shareholders were told at their annual meeting.

Tower has concentrated on its marketing initiatives and getting the basics right, said group managing director Rob Flannagan.

Good growth has occurred across every one of Tower's three businesses; health and life, general insurance and investments, with customer satisfaction and services levels remaining high - which in turn means retention rates are high.

"There is substantial change in the wings with the regulatory environment for insurance and financial services companies," Flannagan said. "Over the next five years the life industry will reinvent itself as a result of the tax changes coming into effect mid 2010. The regulation for financial advisers complements our current expertise and is a core competency for Tower."

Flannagan said Tower expects market conditions to continue to be challenging over the next six to 12 months. There are good signs the economy is improving, but New Zealand is not through the down turn yet he said.

Tower made a $50 million profit in the year ended September 30, up 22 per cent. Profit has grown from the $35 million earned in the wake of the separation of Tower Australia in December 2006.

Other highlights noted were the increased dividend, now to 9 cents a share, from 8 cents the year before and 6 cents a share two years ago. Under the company's dividend reinvestment plan, shareholders have reinvested 47 per cent of their dividend in Tower.

Two capital raisings were successfully undertaken during the year, said chairman Tony Gibbs. In March it issued $80 million unsecured senior bonds in order to repay bank debt.

In September it raised $81 million via a rights issue that was over-subscribed by 47 per cent. This capital allows Tower to take advantage of strategic opportunities that may arise, Gibbs said.