Tower's first-half profit rises despite investment fall

Fund manager and insurer Tower has reported half-year underlying profit up 5 per cent to $21.5 million, despite a fall in investment income.

Net profit for the six months to the end of March rose 32 per cent from the corresponding period last year to $26.6 million, including the non-cash effect of movements in the discount rate adding $5.1 million to the result.

The Health & Life business, which accounts for about 60 per cent of the group result, was affected by a lower level of returns generated in investment markets, Tower said. The net investment return on shareholder funds for Health & Life fell $2 million from a year ago to $1.4 million.

The business' profit after tax before the discount rate effect was down $1.5 million to $13.8 million, but with the discount rate changes was up 25 per cent to $18.9 million.

Group chief financial officer Eric O'Sullivan said life operating profits were down marginally to $6.8 million, due to a fall in investment return on assets supporting policy holder liabilities. New business in Health & Life recorded total sales up 29 per cent, including sales in the individual life market up 111 per cent.

For the General Insurance business, about 30 per cent of group activity, net profit lifted to $9.4 million from $7.7 million a year earlier, with notable improvements in key ratios. Tower shares closed up 11c at $1.68, having hit a year low of $1.25 seven weeks ago.

- NZPA