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Major investor Devon slashes Tower stake

NZN 30/05/2016 Edwin Mitson

A major investor in insurance business Tower has slashed its stake from just under 12 per cent to just under 8 per cent as the insurer's share price slumped and it issued a poor first half update earlier this month.

Auckland-based Devon Funds Management has reduced its holding to 13.1 million shares, or 7.8 per cent of the shares on issue, from 20.2 million shares, or 11.9 per cent of the company, according to a substantial shareholder notice published to the NZX.

The shares were sold between March 14 and May 27. Tower shares closed at $1.76 on March 14 and fell over the period to $1.465 on May 27.

On May 24, Tower reported a net loss of $8.7 million in the six months to the end of March, from a $4.9m loss a year earlier.

Its results included a $19.6m impairment charge on its IT system after a review found it was limiting the company's "high-performance ambitions" according to chairman Michael Stiassny. Tower reported higher claims and static premiums.

Devon had already cut its stake in Tower to 11.9 per cent from 13 per cent between Jan. 6 and March 2, a period in which the value of the shares fell to $1.59 from $1.90.

On its website, Devon claims to manage more than $1 billion in assets on behalf of clients.

By mid-afternoon on Monday, Tower shares were up 4.4 per cent, or 6.5 cents, at $1.53, although have fallen 22.8 per cent since January and are down 30.6 per cent on a year ago.

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