Slide 1: A focused General Insurer: Half year results to 31 March 2013
For personal use only A focused General Insurer Half year results to 31 March 2013 and future strategic direction 28 May 2013
Slide 2: Disclaimer
A focused General Insurer For personal use only This Presentation has been prepared by TOWER Limited to provide shareholders with information and a preliminary understanding of TOWER’s business following completion of the sale transactions arising out of the strategic review. This document is part o
Slide 3: TOWER Group presentation highlights
Significant cash TOWER Group returns presentation highlights to shareholders For personal use only Key achievements Today's announcements Repositioned TOWER as a focused Half year reported profit of $44.2 million after increased General Insurer provision for Christchurch liabilities Releases $370 mi
Slide 4: What we are covering today
What we are covering today For personal use only • Half-year financials to 31 March 2013 • Changes to the business and who we are today • Focused on General Insurance • The way forward • What this means for investors What does it Financials today & tomorrow TOWER today & tomorrow mean for investors?
Slide 5: Half year results to March 2013
For personal use only Half year results to 31 March 2013
Slide 6: Profit summary
NPAT TOWER Group $44.2m Profit summary For personal use only Half Year Ended Mar-13 Mar-12 Sep-12 General Insurance 5.9 5.4 7.8 Life 9.0 12.4 11.3 Health 0.9 6.8 6.5 • Half year result to March 2013 includes: Investments 4.0 3.6 3.4 Business unit net profit after tax 19.8 28.2 29.0 - Two months cont
Slide 7: Analysis of profit growth – General Insurance
Strong premium Analysis of profit growth – General Insurance For personal use only Half Year Ended Mar-13 Mar-12 Sep-12 Gross earned premiums 130.8 113.9 125.0 Reinsurance (23.5) (20.0) (21.2) • Premium growth reflects Net premiums 107.3 93.9 103.8 strength of underlying business Net incurred claims
Slide 8: Overview of abnormal items
Right sized Overview of abnormal items business For personal use only Life sale related costs Investments sale 79.0 • Sale related costs, to date of settlement, Gain on sale 72.4 have been included Sale related costs (5.6) Net gain on sale 66.81 Sale of Australian run-off book • TOWER has agreed to
Slide 9: Christchurch update
Good progress in Christchurch update settling claims For personal use only TOWER is making excellent progress in settling claims relating to the Christchurch earthquake events. Key statistics However, there are three significant issues which have caused TOWER to revise its liabilities provision: • 1
Slide 10: Analysis of HY13 profit results – Non core divisions
Non core Analysis of HY13 profit results – Non core divisions For personal use only Life1 Health1 Investments1 Mar-13 Mar-13 Mar-13 Net premium/income 37.2 24.8 18.1 Policyholder maturities (16.9) Total incurred claims (15.2) (16.4) Premium payback payments (2.3) Management and sales expenses (20.6)
Slide 11: Balance sheet summary
Balance sheet summary Strong balance sheet For personal use only Half Year Ended Mar-13 Mar-12 Sep-12 Cash & call deposits 255.2 192.1 199.7 Total investment assets 936.4 1,003.7 1,036.7 Deferred acquisition costs 17.6 43.6 45.8 • This balance sheet is prior to Intangible assets 36.9 78.8 81.9 the s
Slide 12: Proforma financials
For personal use only Proforma financials
Slide 13: Historical proforma financials
General Insurance Historical proforma financials proforma NPAT average $24.7m Continuing operations For personal use only Continuing Operations FY12 FY11 FY10 Historical Proforma Historical Proforma Historical Proforma General Insurance Reported profit 13.2 2.5 21.9 Remove impact of Australian branc
Slide 14: Application of capital and solvency requirements
Application of capital and 2.8x solvency requirements MSC 2,3 For personal use only • TOWER has a long term policy of retaining within its licensed General Insurance entity 175% of the minimum solvency capital (MSC) required under the Insurance Prudential Supervision Act • TOWER will also retain add
Slide 15: TOWER for today
For personal use only TOWER for today
Slide 16: Market overview
Market overview Growth opportunities For personal use only New Zealand TOWER market share Macro view TOWER perspective ––– ––– ––– ––– Total GWP market share 4.6% 8.2% New Zealand New Zealand Total market Personal lines market • Forecast market growth of • 3rd largest personal lines insurer 5% per a
Slide 17: General Insurance snapshot
Strong General Insurance base for growth snapshot For personal use only As at 30 September 2012: As at 31 March 2013: As at 31 March 2013: As at 31 March 2013: $26.1m $269.0m 497,006 242,569 NORMALISED NPAT Inforce GWP Inforce policies Customers New Zealand $14.3m New Zealand 79.5% New Zealand 88.1%
Slide 18: New Zealand overview
Highly attractive General Insurance product & distribution New Zealand overview mix For personal use only HY13 GWP breakdown HY13 GWP breakdown HY13 New business GWP by product by DISTRIBUTION channel by distribution channel Home 35% Direct 53% TOWER & Fintel phone sales 70% Motor 30% Fintel 5% Alli
Slide 19: Pacific Islands overview
Leading General Insurance market position Pacific Islands overview For personal use only HY13 GWP breakdown HY13 GWP breakdown HY13 GWP breakdown by product by distribution by CHANNEL Motor 36% PNG 44% Direct 43% Commercial 29% Fiji 25% Broker 34% Home & contents 20% Samoa (including American) 16% A
Slide 20: Clear strategic direction
Focused Clear strategic direction General Insurer For personal use only TOWER is currently developing its business strategy as a focused General Insurer. The focus will be on enhancing our customer value proposition. Knowing A focused Right people, Strong risk management customers business right ski
Slide 21: The TOWER shareholder proposition
For personal use only The TOWER shareholder proposition
Slide 22: The TOWER value equation
Compelling The TOWER value equation value proposition at a glance For personal use only + Focused General Insurance business A focused general Insurer, with proforma normalised General Insurance NPAT of $24.7 million (taken as an average over FY10–FY12) + Residual Life Insurance assets TOWER's retai
Slide 23: Immediate areas of focus
Transition Immediate areas of focus focus For personal use only The next half year will see TOWER focus on four key areas Cost Life Board and management Adoption and control divestment structure review implementation of strategic plan ––– ––– ––– ––– • Eliminating corporate support costs • Undertake
Slide 24: Investor outlook
Attractive Investor outlook growth story For personal use only Growth Strongly capitalised Potential for prospects business further value ––– ––– ––– • Strong independent participant in growth • Further excess capital exists within the • Board and management structure currently market with restored
Slide 25: Thank you, any questions?
For personal use only Thank you, any questions?
Slide 26: Appendix A: Supporting information
Appendix A: For personal use only Supporting information
Slide 27: Half year results to March 2013
For personal use only Half year results To 31 March 2013 –––
Slide 28: Investment assets breakdown
Investment assets breakdown For personal use only Life General Total Fixed interest securities (NZ) 546.2 98.7 644.9 Fixed interest securities (AUS) 0.0 15.2 15.2 Fixed interest securities (International) 9.1 27.3 36.4 Total fixed interest securities 555.3 141.2 696.5 Equity securities 49.2 0.0 49.2
Slide 29: Credit ratings for investment assets
Credit ratings for investment assets For personal use only Mar-13 Investment assets subject to credit rating AAA 337.3 AA 602.4 A 28.8 BBB or below 6.9 Unrated investments 55.2 1,030.6 Investment assets not subject to credit rating Fixed interest securities 0.0 Equity securities 107.0 Property secur
Slide 30: General Insurance analysis of profit
General Insurance Analysis of profit For personal use only Half year ended Mar-13 Sep-12 Mar-12 Sep-11 Mar-11 Sep-10 Mar-10 Net premiums 107.3 103.8 93.9 78.0 89.2 92.4 90.8 - Gross earned premiums 130.8 125.0 113.9 106.2 102.1 104.8 101.5 - Reinsurance (23.5) (21.2) (20.0) (13.3) (10.2) (11.0) (10.
Slide 31: General Insurance key statistics
General Insurance Key statistics For personal use only General Insurance – Gross written premiums (Rolling 12) and lapses Half year ended Mar-13 Sep-12 Mar-12 Sep-11 Mar-11 Sep-10 Mar-10 New Zealand 213.8 206.5 190.1 171.8 164.7 163.1 159.1 Pacific Islands 55.3 53.4 47.9 45.0 44.5 45.4 46.0 Total gr
Slide 32: General Insurance key statistics
General Insurance Key statistics For personal use only General Insurance – Underwriting profits Half year ended Mar-13 Sep-12 Mar-12 Sep-11 Mar-11 Sep-10 Mar-10 Underwriting profit/(Loss) (16.7) 2.7 4.7 (7.8) 3.7 6.8 11.2 Combined ratio1 116% 97.4% 95.0% 110.0% 96.0% 92.7% 87.7% $ millions 1 Claims
Slide 33: Proforma financials
For personal use only Proforma financials 8
Slide 34: General Insurance – Income statement
General Insurance – Income statement For personal use only Split between continuing and discontinued operations General Insurance Published Results Total operations Continuing operations Discontinued operations FY12 FY11 FY10 FY12 FY11 FY10 FY12 FY11 FY10 Net earned premiums 197.7 184.8 184.6 197.7