7 Aug 2008

Earnings hit expected by Tower Australia

7:31 am on 7 August 2008

Australia's fourth-largest life insurer, Tower Australia, expects its earnings will be hit after it lost the life insurance business of St George Bank.

The company, which was split from Tower New Zealand's operations in 2006, lost the contract to AIG Life.

Tower says the change had been expected, and its $A700 million book will take a $A60 million hit.

It says there will be no impact on its 2008 profit, though it will be felt in its 2009 profit.

Tower Australia says the effect will be partly offset by lower costs from the loss of the St George contract, and the on-going growth it's already seeing in its business.

Tower Australia has about 30,000 investors in New Zealand.