APRA keeps the spotlight on Tower

An independent actuary is expected to report to APRA next month on aspects of Tower's finances, despite the insurer's accounts for the year to September having only last month been subject to both a statutory and actuarial audit.

The review comes just days after Tower revealed that it would top up its surplus assets by $30 million to give comfort to the regulator in the wake of last month's disappointing $NZ74.9 million ($69.35 million) loss.

While APRA's very public intervention is seen by many as making amends for its allegedly inadequate role in policing the failed HIH Insurance, Tower was reluctant to criticise the regulator.

Instead, Tower's Australian chief executive Jim Minto, questioned whether the corporate watchdog and disclosure policeman, the Australian Securities and Investments Commission, should have required Tower to disclose the top-up to the sharemarket.

But the damage continues to be reflected in Tower's share price, which fell 7c to $1.87, with only potential corporate interest keeping the shares above their recent lows. Guinness Peat Group is thought to have built a small stake before Christmas.

Mr Minto said ASIC's advice was that a market announcement by Tower was in the spirit of heightened investor concern about insurance companies. But the materiality of the announcement was questionable, he said.

The top-up was an internal transfer with little impact from a policyholder or shareholder perspective.

``I am not concerned about our financial situation and our ability to manage this through. We are OK," Mr Minto said.

Mr Minto described the regulators' interest as ``a sign of the times". ``It's also on the end of three really difficult investment years that have knocked around the life industry.

``Regulators around the world are doing a lot of extensive due diligence on life companies and it's our turn right now."

``When you are a regulator you want to demonstrate added value and I think [APRA] are adopting a reasonable approach with us. The problem is these [issues] are being forced to be disclosed when they are pretty routine matters. That is something the market will have to find an equilibrium about."

Mr Minto said while he could not speak for the board and chairman Colin Beyer, the bad press the company had received had probably made it harder to find a permanent chief executive, most likely an external appointee, for the group.

``I know the board's quite picky about wanting a very good person. I can't speak for the chairman but he clearly wants the board to make the right decision rather than a fast decision."

He said Tower and APRA had received phone calls from concerned policyholders but Tower had not breached minimum solvency levels.

``I think APRA are highly professional and want to both do a good job and be seen to do a good job. The situation is very difficult for us. We have acted in good faith. We are not in breach of minimum solvency ... We were only short of our own targeted surplus."