Tower tangles with regulator
Tower Ltd may have thought its problems were over, but it has just announced it is to pump a further $33 million into its Australian subsidiary following huge write-downs in December.
Thursday, January 16th 2003, 6:55AM
by Sue Allen
Tower Ltd may have thought its problems were over, but it has just announced it is to pump a further $33 million into its Australian subsidiary following huge write-downs in December.
The payment is to bring Tower back up to its own predetermined surplus asset level.
However, Tower’s chief financial officer William Giesbers says even without the additional payment, Tower’s required surplus remains above the minimum level set by the Australian Prudential Regulation Authority as required under the Life Insurance Act.
The payment is seen by Tower’s board as a prudent step to take in rebuilding confidence in its Australian business.
In December, Tower announced a net loss of $74.95 million including write downs of $30 million on technology, $40 million in operational losses and redundancy payments and a $35.8 million write down on its Australian master trust business, Bridges.
Giesbers says that after discussions with Apra, the top-up payment is to be made more quickly than Tower had originally planned, and will now be made by 31 March.
He says given the payment is to bring Tower up to its own voluntary buffer level, there was no debate about the payment, just about the timetabelling as requested by Apec.
He says rather than an unforeseen shot in the dark, this is just part of the company’s rebuilding process.
"The press just see snapshots of what we are doing, but we have been working hard to rebuild the company since November. When you make a loss, obviously regulators take more of an interest. We have had regular chats with regulators and this is just part of the clear plan we have in place to rebuild our Australian operation and make it profitable."
Tower says it expects to use internal sources of funds to achieve the increase and does not intend to undertake an equity issue to provide funds to cover the requirement.
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