24 May 2016

Tower Insurance posts $8.7m half-year loss

2:29 pm on 24 May 2016

A huge write-down on its IT systems and lingering Canterbury earthquake claims have contributed to a bigger first-half loss for insurance company Tower.

The listed company made a loss of $8.7 million for the six months ended March, compared with a loss of $4.9 million the year before.

The bottom line was hurt principally by a $14m accelerated depreciation of its IT systems, which it said were an obstacle to the company performing better.

The company also had a further $2m of costs associated with the Canterbury earthquake claims.

Overall the company's premium income was flat, claims were up and its management expenses were also higher.

"It's been a difficult half, the weather effects have been quite significant, the El Nino in the Pacific with Cyclone Winston, there have been increasing claims costs at an industry level across New Zealand, and also we've got increasing competition," chief executive Richard Harding said.

He said leaving aside the one-off items the company's underlying profit was $7.6m, which compared with the previous year's $17.5m profit.

Mr Harding said the company was concentrating on cutting its management and product costs, while retaining core customers. He said it was also seeing policy growth, and he expected to drive an improved second half of the year.

He declined to forecast the 12-month result. Last year the company reported a full year loss of $7m.

Tower has ended its share buy back scheme, but declared an interim dividend of 8.5 cents a share and said it would match the 16 cents per share dividend it paid last year.