Life insurer Tower Australia Group Ltd (ASX:TAL) today announced an increase in underlying profit of 24 per cent to $92.3 million for the year ended 30 September 2010.

Underlying profit for the previous financial year was $74.5 million. Underlying profit (with normalised investment returns) is the best indicator of Tower Australia's performance as it excludes non-cash, accounting-based items and adjusts investment income to reflect normal long-term market returns, the company said.

Net profit after tax (NPAT) of $87.4 million was up 88 per cent on the previous year of $46.4 million.

The embedded value (EV) of Tower Australia rose 25 per cent ($293 million) over the year to $1.5 billion. The value of one year's new business rose 76 per cent to $169 million reflecting strong growth in product margins and life insurance sales.

Tower chairman Robert Thomas said the continued growing strength of the business and its underlying profit performance had allowed the Board of Directors to increase the dividend payable for the year by 10 per cent to 5.75 cents per share. This will be paid in December 2010.

"This has been another year of very good achievement for Tower Australia with strong operational results flowing from market leading propositions across the life insurance market.

Mr Thomas said the company's continued above market growth in the business together with additional available opportunities supported the decision to raise additional capital during the year so that the company is optimally positioned.

"I am proud of our performance since listing in 2006 with underlying profit up an average of 22 per cent pa, return on capital for our core life insurance business generating consistent returns (17.6 per cent in 2010) and embedded value growth of 24 per cent pa.