Tower in capital raising

Insurer Tower Australia Limited has announced a capital raising on the back of what it describes as a solid first half result, reporting a 5 per cent increase in net profit to $28.4 million for the six months to 31 March.

The capital raising takes the shape of a new one-for-seven renounceable pro-rate share entitlements issue aimed at raising $96 million, which the company said would be used to strengthen its capital base and position it “to take advantage of any opportunities that may arise”.

Tower chief executive Jim Minto used the first half results to express concern about the shape of market consolidation occurring within the life and superannuation industries.

He said he remained concerned that large-scale financial services consolidation could restrict the right or ability of consumers through their advisers to pick their life insurer from a range of companies.

“We welcome the Australian Competition and Consumer Commission’s recognition that competition in the platform space may be an issue — although it has stopped short of actively encouraging multiple life insurance offers on platforms to help overcome the obvious downside of less insurance choice as platforms continue to consolidate,” Minto said.

He said Tower believed the technology existed to provide consumers with choice of life insurance on platforms and the present system was area of restricted competition, which was of major concern.

Looking at the company’s underlying performance through the half, Minto said business growth had been achieved across all channels but that there had been some slowing in growth rates across the retail advice market in the first quarter

He said the company had been successfully bedding down its group insurance mandate with AustralianSuper, and had “concurrently continued to win new mandates and maintain high levels of service to existing customers”.