Tower puts its focus on faster growth

Tower is reviewing its acquisition plans after pulling its takeover bid for rival Fidelity Life last month.

The insurance and investment provider, which yesterday revealed a 16 per cent increase in after-tax profits to $58.1 million, had been keen to buy a bolt-on to the business since raising $81.3 million in September last year.

But group managing director Rob Flannagan yesterday said its board was now reviewing those plans.

"It is under consideration at the moment. It is high on the directors' minds," he said.

Flannagan said the business had had a satisfactory operating performance in difficult market conditions but admitted the company had not had the "growth we aspired to get".

After-tax profit in its health and life business, the largest of its operations, was up 13 per cent to $39.2 million, boosted by a one-off discount rate effect.

Its general insurance business was also up 27 per cent to $21.9 million despite a one-off cost of $4.6 million associated with the Christchurch earthquake.

But profits in its investment business fell $3 million to $2.8 million, hit by restructuring costs related to the shift of its investment team from Wellington to Auckland and KiwiSaver distribution costs.

Flannagan said the company had spent the past two months on a strategic review in a bid to focus on growth acceleration over the next three to five years.

It had decided to restructure the business to move it from three separate operations into a one-company approach.

Flannagan said the business environment for Tower had got tougher: "It's not a growing market. Our growth has been very average over the last year.

"I think we are going to go into an inflationary period going forward. We think our customers are struggling now - just from a living point of view. The challenge is to keep products affordable."

Flannagan also said Tower would strengthen its branch network and was considering moving its Auckland call centre out of the central city as part of the changes.

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