The life and health insurance business at Tower NZ helped the insurer weather the costs of the Christchurch earthquake, MD Rob Flannagan told the company’s AGM last week.

“Tower is profitable, when many other insurers have booked losses, many of them significant losses,” he said.

“The diversified business of Tower has protected the shareholder, with the health and life businesses carrying the general insurance business through these times.”

Tower’s life business reported a $NZ18.8 million ($14.5 million) profit for 2011 although this was down $NZ8.6 million ($6.6 million) on the 2010 return.

Part of this decline was due to $NZ1.1 million ($852,000) of direct expenditure on the Christchurch earthquake. Tower had 16 life insurance claims from the event.

The health business recorded a profit of $NZ9.7 million ($7.5 million) in 2011 compared to $NZ7.5 million ($5.8 million) in the previous year.

These returns compared to a general insurance profit of $NZ2.5 million ($1.9 million) in 2011, down from $NZ21.9 million ($16.9 million) in 2010.

Mr Flannagan says policy growth will be a focus in the New Zealand life and health businesses, although the latter is a challenging prospect.

“While Tower manages to maintain its market share in the health market, increased health claims costs are driving increased premiums,” he said. 

“This is making health protection less affordable, and accordingly there is an overall decline in the number of lives covered by the industry.”