Newly independent insurance operation Tower Australia Group (Tower) has reported a 3 per cent dip in net profit for the half year until March 31.
According to the group's chairman Keith Barton, the result has been attributed to unfavourable investment market movements and comes despite a 16 per cent increase in operating profit.
"For instance as a consequence of changes in accounting standards, higher bond rates required us to record losses from discount rate changes. This non-cash item had a $3 million negative impact on recorded profit," Barton said.
Tower reported a first half profit of $17.1 million, with an operating profit of $21.6 million. Tower also announced it intends to return about 25 per cent of net profit after tax to shareholders in the form of a final dividend late in 2007.
According to Tower Australia managing director Jim Minto, while the Australian life insurance market remains attractive premiums had been falling because of lower claims.
"Some of the pricing seen in the group life market today will no doubt lead to questioning and review in the future. The Australian life industry has a responsibility to ensure it remains fully sustainable and delivers its promises to policyholders in the longer term," Minto said.
Tower separated from the New Zealand based Tower Limited in November 2006.
