New Zealand general insurer Tower booked an impairment of its software of NZ$44.9 milllion in its 2013 financial year, effectively writing off parts of a brand new core IT system.
Tower's 2013 annual report (pdf) reveals that the impairment reduced net profit by NZ$31.3 million after tax after the sale of the company's life insurance, investment and health insurance businesses last year forced it to revalue its software assets.
"There has been a re-assessment of the IT systems that are required moving forward, taking into account the significantly reduced size of the business, with an increased write-down included in the second half," the report says.
"Management have reviewed the carrying value of intangible assets in light of recent business disposals. Following this review, an impairment of $44.9 million ($32.3 million net of tax) was recorded against the carrying value of intangible assets – software.
"This impairment has been expensed in the 30 September 2013 results reducing the profit from discontinued operations/disposal groups."
Tower had been implementing a new core IT system from Target Harlosh, since renamed as Target, across its business.
A spokesperson said that rollout will continue in the general insurance business Tower has retained.
"The system is live and currently administering our Fintel product range," the spokesperson said. "The next phase is to migrate Tower’s direct customer base onto this platform and we expect this to occur later this year."
Tower sold its health insurance business in late 2012 for $102 million to Australia's Nib, its investment arm to Fisher Funds for $79 million last February and its life insurance business last May to Fidelity Life for NZ$189 million.