UPDATE: Tower shares gain on dividend, 1H earnings 26 May 2015
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
UPDATE: Tower shares gain on souped-up dividend, 1H underlying earnings rise
(Updated and recast with broker, CEO comment, share price)
By Paul
McBeth
May 26 (BusinessDesk) - Tower shares rose to a
month-high after the general insurer hiked its interim
dividend and confirmed an on-market share buyback after
lifting first-half earnings 36 percent on rising premiums
and fewer claims.
The stock jumped as high as $2.22 and was recently up 4.3 percent at $2.20 after the Auckland-based insurer reported underlying profit of $17.9 million in the six months ended March 31 from $13.1 million a year earlier. Gross written premium rose 4.9 percent to $145.9 million, while favourable weather across New Zealand and the Pacific helped cut the insurer's claims ratio to 44.5 percent from 50.4 percent a year earlier.
Chairman Michael Stiassny today confirmed
plans to implement an on-market share buyback of up to $34
million, or 10 percent of Tower's stock, which he said will
commence shortly. The board declared an unimputed interim
dividend of 8.5 cents per share, payable on June 30 with a
June 12 record date.
"The result was at the higher end
of earlier guidance, and the 8.5 cents per share dividend
was well-up on the previous payment," said Grant Williamson,
a director at Hamilton Hindin Greene in Christchurch. "The
underlying earnings show a very nice increase on the back of
premium increases."
Auckland-based Tower reported a net loss of $4.9 million, or 2.99 cents per share, compared to a profit of $13.1 million, or 4.96 cents, a year earlier. The insurer increased provisioning for costs associated with the Canterbury quakes by $22.6 million, slightly above the top of the forecast range flagged earlier this month, as projected rebuild costs rose due to labour and material shortages and higher building costs. That pushed the insurer's projected claim expense above its $325 million reinsurance limit for the major 2011 event.
The
company signalled it would face higher claims expenses from
the Canterbury rebuild earlier this month to reflect an
industry-wide increase in costs and delays for repair and
rebuild work, higher costs of complex multi-unit claims, and
a clearer understanding of where claim costs fall between
Tower and reinsurers. That increased cost was also captured
in the Reserve Bank's recent financial stability report,
which raised its estimate for industry claims to between $33
billion and $38 billion from a previous range of $32 billion
to $37 billion.
The insurer settled 94 percent of all
claims relating to the Canterbury rebuild as at April 30,
and was carrying $51 million in capital above its minimum
solvency requirements under the central bank's prudential
regime.
"We are very pleased with the improvement in our underlying general insurance profit over the past six months," chief executive David Hancock said in a statement. "We have been busy implementing our growth strategy: transforming our customer interactions to drive revenue and efficiency, building our digital capability to take us into new distribution channels, and increasing our very strong position in the Pacific Rim."
Tower is looking to latch on to its 140-year history of providing insurance across the Pacific to access largely greenfield opportunities in Papua New Guinea, Fiji and the Solomon Islands, and it plans to launch in Vanuatu later this year.
The company entered
into an alliance partnership with Trade Me, which Hancock
said would be target distribution, without being more
specific.
Tower didn't provide full-year earnings guidance, though Hancock said second-half performance was typically similar than the first six months of the financial year.
The company said the insurance industry will see
growth in reinsurance costs following the Canterbury quakes
which will put upward pressure on premiums, while technology
advances provide opportunities to improve service while
reducing costs.
Tower anticipates consolidation in the sector to continue, and it will participate where there is benefit to shareholders, though Hancock said the insurer is primarily targeting organic growth.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more