Chch quake cuts Tower profits by 43pc

Yesterday's geotechnical report means the cordon around the red zone could be gone by April. Photo / Geoff Sloan

The Christchurch earthquakes have taken their toll on Tower, with the listed insurance and financial services group suffering a 43 per cent fall in its net profit for the year to September 30.

The company, which is 35 per cent owned by investment company Guinness Peat Group, slashed its final dividend to 2c a share, down from 6c last year, taking the total payout for the year to 6c, down from 10c last year.

Tower's a net profit fell to $33.4m, compared with $58m a year earlier.

"This is a satisfactory performance, especially in light of the demands on our business from the Christchurch earthquakes," group managing director Rob Flannagan said.

Excluding the negative impact of the Christchurch earthquakes and the positive impact of the discount rate, a profit of $54.6m was achieved, which was $3.7m or 6 per cent down on the corresponding period in 2010. Tower said the fall was due to lower investment earnings.

The Christchurch earthquakes and the global financial crisis created a difficult operating environment during the reporting period, but Flannagan said the result showed that Tower had responded well to the these challenges.

Claims of more than $450m relating to the Christchurch earthquakes are being processed and Tower will meet these claims in the normal course of business, he said.

Tower's net asset backing per share rose to $1.72 per share, and there was a 3 per cent increase in total equity over the previous year to $455.5m. Gearing remained conservative at around 15 per cent.

The company's shares last traded at $1.42, down 5c.