Tower keen to buy in NZ and Australia

Tower's incoming chief executive, Jim Minto. Picture / Kenny Rodger

Slimmed-down insurance company Tower is looking at reinstating dividends and confirms it is on the prowl for acquisitions here and in Australia.

A 2 1/2-hour annual meeting in Auckland yesterday - the first to be held in the city - featured more than 200 shareholders, a parade of personalities and fragments of new information.

Chairman Olaf O'Duill charmed with an Irish brogue, Guinness Peat Group director Tony Gibbs defended GPG's role in Tower - and veteran shareholder activist Max Gunn railed on the company's fall from past greatness.

It was a last appearance for exiting managing director Keith Taylor.

To a shareholder's question, O'Duill said dividends would be considered after the spin-off of the Australian Wealth Management business on to the Australian Stock Exchange.

"I can't make that promise right now - it's under review right now."

After the meeting, incoming chief executive Jim Minto said the topic would be considered in the three to six months after the spin-off.

Shareholders Association chairman Bruce Sheppard later emerged as a doubter, saying most shareholders would welcome dividends but he neither wanted nor expected them - and nor did he want acquisitions.

The company had "five years of acquisition policies and they have all resulted in immense wealth destruction".

"Even with the injection of cash from sale of the wealth management business, my assessment is that the balance sheet is still pretty skinny for the policyholder obligations it is carrying," he said.

In his speech, O'Duill highlighted the possibility of acquisitions when he told shareholders the Australian Wealth Management spin-off would inject A$130 million ($143 million) into the company's coffers.

"This will give the more specialist Tower Group the opportunity to consider its options regarding acquisition possibilities in New Zealand and Australia in areas that complement our risk business," he said.

BT Funds Management's head of equity research, Slade Robertson, later said most of the money Tower would get from its wealth management business would go towards supporting its operational business.

Any acquisition would be small and in Australia - where the key growth opportunities seemed to lie.

"What they need to focus on now is distribution of product, so any acquisition would be angled to enhancing their distribution."

GPG's Gibbs and Dr Gary Weiss were re-elected to the board along with Keith Barton.

Answering a shareholder's question, Gibbs defended GPG's role in Tower - including underwriting capital raisings - against suggestions that it acted contrary to the interests of small shareholders.

He said GPG had put its shoulder to the wheel of the company when it was needed most.

On the company's first quarter performance, O'Duill said: "We certainly are pleased in the way things are going" while Minto said Tower was in good health but would be looking at simplifying systems.

The new entity

* After spinning off Australian Wealth Management, Tower will have an insurance and funds management business in New Zealand, and an insurance business in Australia.

* It will have assets of $4.8 billion.

* Tower's New Zealand business will manage $6.3 billion of funds.

* It will be the country's second largest health insurer and have a 9.4 per cent share of the general insurance market.

* Tower Australia will manage $3.2 billion of funds.