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Shareholder Review
Annual Report
Notice of Meeting
FROM THE
MANAGING DIRECTOR
14%
INCREASE
UNDERLYING NET PROFIT,
$68 MILLION
13%
INCREASE
LIFE INSURANCE IN-FORCE
PREMIUM, $749 MILLION
11%
MARKET SHARE
4TH LARGEST AUSTRALIAN
LIFE INSURER
The 2008 year has been difficult both in
economic and financial terms for investors
and consumers as investment markets have
fallen and communities have struggled with
volatile economic conditions. Some high
profile life insurance companies in overseas
markets have been adversely affected.
Significant media attention has been focused
on the deteriorating financial and capital
positions of these companies and the
regulatory actions and government bailouts
that have resulted in some cases.
The Australian life insurance market is well
regulated and companies operating in this
industry are closely monitored. Adverse
impacts in this market have thankfully
been limited and the sector continues to
experience growth in premium income
in excess of 12% per annum.
TOWER Australia (ASX:TAL) has had
another successful year in 2008 and has
ended the year in a stronger competitive
position than at the start. The strategic
focus of the business has been on building
core capabilities and strengthening our
distribution platform. The growth in
our underlying profit reflects a solid
operating performance and a favourable
market for life insurance in Australia.
In difficult economic times, many people
seek additional life insurance protection
and people also tend to be more likely to
retain the life insurance cover they have.
Life insurance sales for TOWER Australia
were strong in all areas during the 2008
financial year and business retention was
within expectations. Total life insurance
premium income inforce grew 13% to
$749 million over the year.
The purchase post year end of InsuranceLine
was strategically important for TOWER
Australia. InsuranceLine is the fastest growing
and largest direct distributor of life insurance
products in the Australian market. This
purchase cements TOWER Australia's strength
in the key direct sales market and will help
underpin future growth in the business.
It is very pleasing to report that TOWER
Australia ended the 2008 financial year well
capitalised, financially strong, performing
well and in a good competitive position to
grow further in 2009.
FINANCIAL PERFORMANCE
AND STRENGTH
TOWER Australia's underlying profit of
$67.9 million for the year represented an
increase of 14%. Strong operating profit
in the life insurance business was offset to
some extent by the reduction in operating
margins in the investment business where
reduced fee income reflected the
investment market impacts on the
level of funds under management.
The trends in the key business drivers of
sales, lapses, claims and expenses were
positive but management of TOWER
Australia recognises the need to remain
vigilant and to ensure the Company
remains flexible to changing markets and
global trends. TOWER Australia remains
firmly focused on its cost structure and will
continue to drive improvements throughout
the business to boost both customer service
and other aspects of competitive strategy as
well as shareholder returns.
Continued growth requires investment
in technology and people and TOWER
Australia has done this in a responsible and
sustainable manner. The productivity focus
for 2009 is to continue to implement steps
to simplify the business and to keep cost
growth well below that of the Company's
overall revenue growth.
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