Life insurer Tower Australia has failed to avoid the impact of the global financial crisis, reporting a 32% drop in net profit after tax to $46.4 million.

Instead it has pointed to its strong underlying profit, which increased 10% to $74.5 million for the year ending September 30.

Tower Chairman Robert Thomas says the fall in net profit was largely due to investment market impacts and non-cash items including a higher amortisation charge.

He says that, during a period of “unprecedented instability” in international financial markets, Tower was a strong performer in life insurance.

“The financial services market, and in particular, the life sector, has seen consolidation over the past year,” he said. “Tower Australia is well placed as an independent, non-bank, life insurance company to participate in this consolidation.”

Tower Australia MD Jim Minto says the business performed generally as planned and has a strong overall capital position that was reflected by Standard & Poor’s decision to upgrade the company to A (stable outlook).

He says the company also received more lump sum total and permanent disablement claims and more group disability business claims than expected in the last quarter of the year.

Tower Australia says it continues to be positive about the life insurance market’s scope for growth, with independent research forecasting the industry will grow from $8 billion to more than $20 billion by 2020.