30 May 2011

Tower still has sights set on AMI

7:05 am on 30 May 2011

Tower still has its sights set on acquiring AMI and is not eyeing any other opportunities.

In May, the Government agreed to a $500 million financial backstop package for AMI, after the Christchurch-based insurance company admitted it might not have enough in reserves to pay claims from February's quake.

The quakes also hit Tower, wiping $7.5 million from its bottom line in the six months to the end of March.

But it had already built up a war chest for acquisitions, after an unsuccessful attempt to buy Fidelity Life.

Managing director Rob Flannagan says it remains very interested in AMI.

He says the client base at AMI seems to be stable with an attitude that it's currently Government guaranteed.

Tower says it will be able to pay the $350 million in expected earthquake claims.

Once the earthquake and discount adjustments are stripped out of its half year result, underlying profit slipped only 5% to $26.2 million.