Standard & Poor’s has given Tower the thumbs up on its credit rating. S&P last week affirmed its A counterparty credit and insurer financial strength ratings on core Tower Ltd, life insurance subsidiaries, Tower Life Australia and Tower Life (New Zealand) Ltd.
Tower Insurance’s A insurer financial strength and counterparty credit ratings have been affirmed.
S&P says the outlook on all its ratings for Tower is stable.
The A ratings on Tower’s core operating subsidiaries reflects the group’s superior business position in its home market of New Zealand, and continued efforts to further build its profile in the larger Australian market. Australian operations now contribute more than two-thirds of the group’s revenue, with growth in funds under management being significantly aided by acquisitions in recent years, S&P says.
S&P says premium and funds under management growth, excluding growth through acquisition, has been moderate in the past year due largely to the effects of losing the Australian equity management team at the beginning of 2000. Moderate premium growth will be assisted by Tower’s approach to distribution ownership.
"Tower’s key challenges are to be able to leverage off its distribution network while restoring confidence in the independent financial advisors network, which is required to enable the group to generate good new business volumes," S&P says.
"This is overlayed by a competitive Australian market that recently has had its profitability affected by a bout of tax reform."
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