Tower Australia profit takes hit

Tower Australia Limited has reported a solid full-year result, but could not evade the impact of the global financial crisis, reporting a 32 per cent decline in net profit after tax of $46.4 million.

Announcing its result to the Australian Securities Exchange (ASX) today, Tower preferred to point to its underlying profit which it said had increased by 10 per cent to $74.5 million for the year ending 30 September, claiming that it was a better indicator of performance because it excluded non-cash, accounting-based items and adjusted for investment income to reflect normal long-term market returns.

However, it acknowledged that its net profit after tax had been affected by struggling investment markets and non-cash items (including a higher amortisation charge).

Commenting on the result, Tower chief executive Jim Minto said that while the business had performed generally as planned, it had received more lump sum total and permanent disablement claims and more group disability business claims than expected in the last three months of the year.

He said this had reduced the company’s life profit, although individual disability claims had not shown any significant change in the period.

Drilling down on the company’s divisional performance, Minto said the company had leading growth positions in the Independent Financial Adviser, Group Life and ‘direct to consumer’ markets.

He said the company held a positive outlook for the future performance of the life insurance market, based on independent research indicating scope for future growth. He added that Tower has forecasted the industry to grow from $8 billion currently to over $20 billion in 2020.