Trans-Tasman life insurer and fund manager Tower has reported a net profit of $NZ42.7 million, a figure that doesn’t include the sale of its Australian wealth management business. The profit is an increase of 67% on last year’s profits, but the group still needs to double its operating profits before it can pay shareholders a dividend. And it’s going to pay attention to its service levels. 

While the group was happy with the progress of its Australian business, it wasn’t satisfied with the performance of its NZ operations, which recorded a $NZ1.6 million underwriting profit (compared with a NZ$5.7 million loss for 2004) and together with investment income of $NZ18.1 million, delivered a 59% increase in net profit to $NZ12.6 million.

Tower Group MD Jim Minto says the group’s NZ business was affected by issues of “poor service early in 2005 and is below management expectations”.

“The Tower Health & Life business, while recording a lower profit, is being vigorously renewed and we are working hard on increasing staff skills, building our competitive strategy and the value we provide to our customers,” he said.

The Australian operations saw net profit for the year rise 51% to $NZ35.1 million, with strong growth in life insurance sales. The group says it’s looking at growing its retail and group life insurance businesses “both by increasing market share and addressing the underinsurance gap”.

“We have taken decisive action this year to give us a stable, reliable and sustainable platform for growth and improved performance in New Zealand,” Mr Minto said. “In Australia, the team is focused on building on recent market achievements.”

And if market speculation is right, the group might be further advanced in looking for acquisition targets than previously thought.

Last week the New Zealand Herald reported Tower is “having a look” at life insurer PrefSure.

Mr Minto didn’t deny the group was one of the parties interested in purchasing the company, which is owned by South African-based insurer Liberty.