TOWER Australia Group Limited July 2009 Shareholder Newsletter

Transcription

1 24 July 2009 Company Announcements Office Australian Stock Exchange Limited Exchange Centre Level 6, 20 Bridge Street Sydney NSW 2000 AUSTRALIA Dear Sir/Madam TOWER Australia Group Limited July 2009 Shareholder Newsletter In accordance with the Listing Rules, please find attached the July 2009 TOWER Australia Group Limited Shareholder Newsletter. Yours faithfully Philippa Ellis General Manager Investor Relations & Listed Company Secretary TOWER Australia Group Limited

2 JULY 2009 SHAREHOLDERNEWS TOWER AUSTRALIA GROUP LIMITED HALF YEARLY NEWSLETTER (ASX:TAL) ACN LETTER FROM JIM MINTO TOWER Australia Group Limited (TOWER Australia) is a unique company. It is the only listed company in Australia which earns most of its income from life insurance or wealth protection products and services. TOWER Australia offers consumers choice in how to obtain life insurance or wealth protection be it direct, with full advice from an independent financial adviser or through a workplace or group arrangement. TOWER Australia is committed to ensuring that people can obtain the life and living insurance cover that best suits their needs, quickly and easily. Our ambition is to make life solutions a well understood and valued part of peoples lives. Dear Shareholder, Welcome to the July 2009 edition of the TOWER Australia shareholder newsletter. This newsletter covers: TOWER Australia s financial results for the six months to 31 March 2009, which were announced in late May 2009; The Dai-ichi Mutual Life Insurance Company, our cornerstone shareholder and its two representatives who are Directors on the TOWER Australia Board; InsuranceLine, which became wholly owned by TOWER Australia in November 2008 and its two joint Chief Executive Officers; TOWER Australia s competitive strategy and positioning; and Information for shareholders about dividends, electronic communication, important dates and key contact details. We are very pleased to have grown our underlying profit by 13% to $38.2 million for the six months ended 31 March 2009 compared with the same period last year. TOWER Australia has grown its underlying profit in each of the five half year periods since it listed on the ASX and the financial results for the latest six months reinforce the ongoing success of the company s life insurance market strategy. The six months to 31 March 2009 also saw some significant developments with your company. In October 2008, The Dai-ichi Mutual Life Insurance Company became a cornerstone shareholder in TOWER Australia with a 29% shareholding. Having such a strong and experienced life insurance company as a cornerstone shareholder is of great benefit to all and provides us with a large number of opportunities to grow and build further shareholder value. In November 2008 TOWER Australia completed the acquisition of the remaining 85% of InsuranceLine that it did not already own. InsuranceLine is the leading participant in the strong and growing direct to customer sector of the life insurance market. The acquisition of InsuranceLine builds on TOWER Australia s highly competitive market position, gives us access to a quality management team and provides us with a call centre and sales capability that can be extended into other key business relationships and market segments. The Australian life insurance market continues to grow at above 10% per annum and is expected to treble in size to $20 billion by Being in a strong growing market will not in itself lead to success. Greater investment in technology and other sources of competitive advantage will see increasing disparities in performance and success of industry participants in future. TOWER Australia sees the continued strengthening of our competitive position as critical and our strategy is to achieve market leadership with the interests of customers and partners at the forefront. Thank you for your support of TOWER Australia. Our aim is to continue to deliver value to our shareholders by remaining a focused, innovative and people driven company. Jim Minto Managing Director

3 2 TOWER SHAREHOLDER NEWS DAI-ICHI LIFE The Dai-ichi Mutual Life Insurance Company (Dai-ichi Life) became the largest shareholder in TOWER Australia in October 2008 when it purchased the entire shareholding of the UK investment company Guinness Peat Group plc. As at June 2009, Dai-ichi Life had a 28.5% shareholding in TOWER Australia. Dai-ichi Life was established in 1902 and is Japan s oldest mutual life insurance company. It is one of the world s top ten life insurers based on revenue and provides individual and group life insurance and annuity products to over eight million policyholders. Dai-ichi Life and TOWER Australia have a Business Co-operation Agreement in place, the key features of which are to facilitate knowledge sharing and to support the development of TOWER Australia s Australian business. Two Executives from Dai-ichi Life have been seconded to work at TOWER Australia, exploring opportunities for growth and providing an effective link for information flows between TOWER Australia and Dai-ichi Life. Two representatives of Dai-ichi Life have joined the TOWER Australia Board as non-executive Directors. MR TAKAYUKI KOTANI (NON-EXECUTIVE DIRECTOR) Mr Takayuki Kotani is General Manager, International Business Management Department of The Dai-ichi Mutual Life Insurance Company. He is responsible for the management of Dai-ichi Life s entire international business, including new business developments and management of the existing international businesses in Taiwan, Vietnam, India, Thailand and Australia. MR TETSUYA KIKUTA (NON-EXECUTIVE DIRECTOR) Mr Tetsuya Kikuta is Managing Director of Dai-ichi Life International (AsiaPacific) Ltd. He is responsible for Dai-ichi Life's business in the Asia-Pacific region with particular focus on the expansion of new business development and was involved in and responsible for all of Dai-ichi Life s business expansion deals in Taiwan, Vietnam, India, Thailand and Australia. A$m FINANCIAL RESULTS SIX MONTHS ENDED 31 MARCH 2009 TOWER Australia announced an increase in underlying profit of 13% to $38.2 million for the six months to the 31 March The core life insurance business performed strongly during the six months with new individual life business sales growing 24% ahead of the same period in Net profit after tax of $27.1 million was down 12% on the same period the previous year due largely to investment market impacts. TOWER Australia has consistently maintained that the underlying profit provides a more accurate measure of the company s performance as it excludes non-cash, accounting-based items and adjusts investment income to reflect normal long-term market returns. FINANCIAL PERFORMANCE UNDERLYING PROFIT % Underlying Profit 11.0% Return on Equity (annualised) 11.9% 12.4% 11.7% 12.2% 15% 12% 9% 6% HIGHLIGHTS THE HIGHLIGHTS OF THE RESULT FOR THE SIX MONTHS ENDED 31 MARCH 2009 WERE AS FOLLOWS: UNDERLYING PROFIT $38.2 MILLION - UP 13% UNDERLYING PROFIT PER SHARE 10.9 CENTS - UP 8% UNDERLYING RETURN ON EQUITY 12.2% - DOWN 2% INFORCE PREMIUM $710 MILLION - UP 2% H06 1H07 2H07 1H08 2H08 1H09 3% 0% EMBEDDED VALUE $899 MILLION - UP 15%

4 BUSINESS PERFORMANCE TOWER Australia s business through independent financial advisers is growing strongly, reflecting strengthened capability and increased consumer demand. The introduction of TOWER Australia s electronic underwriting capability with the Accelerate product and process in 2008 has provided considerable efficiency benefits to both advisers and to the company. It has also been of considerable benefit to customers in the faster speed of obtaining protection. Almost 50% of sales through the adviser channel are now completed using Accelerate. TOWER Australia s group business which delivers life insurance protection through superannuation and workplace schemes has invested significantly in business partnering and underwriting technologies which have been successful in securing new mandates over the period. TOWER Australia will continue to invest in these innovations and is looking to transform the market in terms of technology solutions for its business partners. TOWER Australia s direct to customer business, InsuranceLine, performed well over the six months and is well positioned to help Australians obtain the life insurance cover they need in an environment where most people do not have access to advice and many are significantly underinsured. TOWER Australia s 2009 interim financial results and market presentation can be accessed on the Shareholder Centre section of the website: TOWER SHAREHOLDER NEWS 3 TOWER AUSTRALIA COMPETITIVE STRATEGY Retail products via full advice Dealers Advisers Service Partnerships Technology Product design Innovative processes Group & Workplace Industry Funds Companies Superannuation schemes Master Trusts Partnerships Business-to-Business technology Solutions design Direct to consumer InsuranceLine Alliances Simple no advice products Strong direct skills and capability Marketing and Sales CORE COMPETENCIES Underwriting, Pricing and Claims Management ASPIRATION/GOAL Ongoing leadership in all segments with excellence delivered by strong people capability TOWER AUSTRALIA COMPETITIVE POSITION A$m CBA Source: Plan for Life ING/ANZ NAB TOWER TOTAL INFORCE PREMIUM MARCH 2009 AMP AIA AXA SUN WBC AVIVA Group Life Disability Income Term Life METLIFE ZURICH INSURANCELINE InsuranceLine is Australia s largest direct distributor of life insurance products. TOWER Australia first bought 15% of InsuranceLine in 2005 and moved to 100% ownership in October 2008 when the remaining 85% of the company was acquired. TOWER Australia s relationship with InsuranceLine has been a successful one extending more than ten years. Specialising in the general advice section of the market, InsuranceLine has been able to achieve strong growth in recent years through its appeal to customers via successful television advertising and direct sales. InsuranceLine has close to 200,000 customers. It advertises by mainstream media and sells life insurance policies to customers over the telephone through its call centre. InsuranceLine administers the policies on behalf of TOWER Australia which is the underwriter of the policies. Two new Executive faces were added to the TOWER Australia Executive Team following the acquisition of InsuranceLine. Howard Ware and Bradley Goldschmidt co-founded InsuranceLine in 1998 and are its joint Chief Executive Officers. HOWARD WARE (JOINT CHIEF EXECUTIVE OFFICER) Howard Ware has 20 years of senior management experience in both life and general insurance in Australia and South Africa and has been a Management Consultant for a major global accounting firm. In South Africa he was a General Manager at one of the largest insurance companies and part of the team that successfully pioneered the direct insurance distribution concept. BRADLEY GOLDSCHMIDT (JOINT CHIEF EXECUTIVE OFFICER) Bradley Goldschmidt has spent over 18 years in the insurance industry, both general and life insurance and has played a leading role in developing direct channels in both industries. In South Africa he was a General Manager at one of the largest insurance companies and part of the team that successfully pioneered the direct insurance distribution concept.

5 4 TOWER SHAREHOLDER NEWS SHAREHOLDER INFORMATION ELECTRONIC COMMUNICATIONS TOWER Australia is committed to simplifying the way we communicate with our shareholders and increasing the use of electronic communications. Our objective is to achieve ongoing savings to benefit all shareholders and to help the environment. You can elect to receive all your shareholder information by notification as soon as the material is able to be accessed on the TOWER Australia website. Receiving information this way is quicker and easier for shareholders and it helps to reduce the amount of paper we use to keep you informed. To register your address and receive your shareholder information electronically in future, go to the Shareholder Centre page on the TOWER Australia website and click on the link to the Share Registry, Computershare website. TOWER AUSTRALIA WEBSITE The TOWER Australia website is an important communication vehicle for shareholders. In the Shareholder Centre section you will find information and services including: TOWER Australia share price updates (20 minute delay) and historical share price charts The latest market announcements from TOWER Australia A comprehensive Corporate Governance section CONTACT DATES END NOVEMBER 2009 Announcement of TOWER Australia financial results for the year ended 30 September EARLY JANUARY 2010 TOWER Australia 2009 Annual Report and Shareholder Review published. END JANUARY dividend paid to shareholders (subject to Board approval). EARLY FEBRUARY 2010 TOWER Australia Annual General Meeting Board and Senior Management profiles Financial reports including annual and interim reports Presentations and webcasts of financial results and market briefings Annual General Meeting information and documents A link to the Share Registry, Computershare The TOWER Australia website also has information about the products and services offered by TOWER Australia Life Insurance, Superannuation and Investments. TOWER Australia Share Registry Shareholders with enquiries about share transactions, changes of address, direct credit advices etc should contact TOWER Australia s share registry: Computershare Investor Services Pty Limited GPO Box 2975 Melbourne Victoria 3001 Australia Ph: (within Australia) (if international) Fax: Web.queries@computershare.com.au Website: Investor Relations Shareholder enquires about TOWER Australia s operating or financial performance should be ed to: investor.relations@toweraustralia.com.au or addressed to: General Manager Investor Relations TOWER Australia Group Limited PO Box 142 Milsons Point, NSW 1565 AUSTRALIA DIVIDENDS Dividend Policy & Payments Dividends are determined by the Board of Directors having regard to a range of circumstances within the business operations of TOWER Australia. The Board has announced that it intends to pay dividends once a year and that the payout ratio in the medium term will be in the range of 20% to 40% of underlying profit. TOWER Australia s policy is to pay one dividend a year prior to the Annual General Meeting and after the company s full year results are announced. Dividend payments from TOWER Australia are paid by direct credit into a shareholder s nominated Australian or New Zealand bank or financial institution account. TOWER Australia also operates a Dividend Reinvestment Plan which enables shareholders to increase their investment in TOWER Australia shares in an easy and convenient way without incurring brokerage fees or other transactional costs. Direct Credit Instructions A dividend for the year ended 30 September 2008 of AUD 4.5 cents per share was paid to shareholders in January If you have not received your dividend payment, please provide your direct credit banking instructions to the TOWER Australia share registry, Computershare Investor Services Pty Limited (Computershare). Computershare s contact details are listed in the Contact section. If you prefer to update your details online please go to the Shareholder Centre section on the TOWER Australia website and click on the link to the Share Registry website. Dividend Reinvestment Plan TOWER Australia offers its shareholders the opportunity to have some or all of their annual dividend reinvested in the company. Details of the Dividend Reinvestment Plan can be obtained from the Shareholder Centre section on the TOWER Australia website.