Tower, the insurer that raised $81.3 million in 2009 to pursue growth opportunities, says it will consider returning capital to shareholders after being outbid in acquisitions by rivals with deeper pockets.
The August 2009 rights offer had been intended to provide "support for Tower's organic growth strategies" and to "take advantage of strategic opportunities that may arise," it said at the time. The company is now re-evaluating how best to get "optimal returns for shareholders on their capital," chairman Bill Falconer told shareholders at their annual meeting today
"I am conscious that we raised capital from shareholders two years ago to enable us to pursue value creating opportunities which would provide scale for Tower," Falconer said. "With nothing immediately on the horizon, capital repatriation will be addressed as part of this work."
Tower missed out on acquiring Christchurch-based insurer, AMI Insurance, after Insurance Australian Group agreed to buy the business for $380 million after the region's earthquakes forced it to seek a government bailout. It had $223.98 million of cash or near-cash on its balance sheet as at the end of the 2011 financial year, according to its annual report.
"We have been out bid by bigger balance sheets in our attempt at acquisition," said Rob Flannagan, group managing director, told the meeting. "Any acquisition opportunities that emerge will be evaluated to see if they will enable a step up in growth that the company wants to pursue, but that is not the strategy on which we are focused day to day. We will continue to look at acquisitions and divestments if this adds to shareholder value."
