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Insurer Tower New Zealand says it expects heightened fear generated by tough economic conditions to boost its business but admits the current woes are unprecedented and things may not pan out in line with previous downturns.
The company, which split from its Australian division two years ago, yesterday posted a September year net profit of $40.5 million, up 17 per cent on last year.
However, the increase was a function of the complex tax treatment of insurance businesses which this year saw Tower receive a $2 million tax credit as opposed to its $9.4 million tax bill last year.
The company's pre-tax profit on continuing operations at $38.5 million was down on last year's $44 million and total revenue from continuing operations fell 5.5 per cent to $454.8 million.
Across its businesses, net profit was up at Tower's health and life division, rising 25 per cent to $28.5 million while general insurance net profit was up from $12.3 million a year ago to $14.8 million.
Chief executive Rob Flannagan expected that growth to continue.
"We've seen it before in recessionary times that when the market gets into a depressed state people do look at protecting their assets, they do look at their life insurance and they do look to make sure their house is covered. That's a positive aspect balanced simply by whether they can afford it.
"We expect growth in the market but there are some factors that could impact that - this is a time that we haven't experienced before."
Meanwhile, Flannagan said there were some encouraging early signs of growth in funds under management at Tower's investment business, which has been hit by a combination of funds outflow and poor returns.
The investment division's profit was more than halved, falling from $7.6 million to $3.7 million.
Funds under management have fallen to $3.9 billion from just over $5 billion a year ago and investment income for the year was down from $63.9 million to $56.5 million.
Tower now has just over 56,000 KiwiSaver customers with $139 million under management. Tower shares closed up 1c at $1.44.
