Tower’s insurance results a mixed bag
25 May, 5:35pm by Niko Kloeten
Tower's life insurance business is performing ahead of expectations but its health insurance business is "struggling" with the same problems facing the entire industry.
The company's half-year results show the life insurance side has been largely unaffected by recent tax changes, which some in the industry feared could drive away customers due to increased costs.
Life insurance profit before tax in the six months to March 31 was $12.4 million, down slightly from $12.5 million in the half year to September and up from $6.3 million in the March half last year.
Net premiums in the half increased to $36.0 million, from $34.5 million in the September half and $34.0 million in the same period last year.
Asked if the increase was due to higher prices or an increase in customers, Tower chief operating officer Michael Boggs said it "truly is a mix of both."
He said prices had increased as a result of the tax changes but increases were being phased in slowly and as yet hadn't resulted in an outflow of customers.
"It certainly doesn't appear to be the case so far but we've still got three years to go of it so it's going to be interesting as we monitor price through it to maintain the profitability."
Life insurance had performed "a little bit better than what we had forecast," he said.
Although Tower's half-year health insurance profit increased to $6.8 million from $3.2 million in the September half and $6.5 million in the same period last year, Boggs said the market was tougher for that side of the business.
"The health insurance sector is a little bit different; fewer people are being insured. The latest industry figures show the number of people with health insurance is the lowest in the last six years.
"We're struggling with that happening at the same time the cost of claims is going up. It's been a consistently difficult market trying to balance claims and costs."
Tower's overall profit rose to $23.6 million in the half, 83% up from $12.9 million a year earlier.
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