Tower raises FY25 profit guidance on benign weather losses

By Ryan Hewlett

April 23 - (The Insurer) - New Zealand’s Tower Limited has raised its profit guidance for the 2025 fiscal year owing to a better-than-expected claims performance driven by an “unusually prolonged” period of favourable weather, a lower inflationary environment and positive trading conditions.

The Auckland-based insurer said in a stock exchange filing that it expected full-year underlying net profit after tax to range between NZ$70 million ($41.9 million) and NZ$80 million, up from the previously advised range of between NZ$60 million and NZ$70 million.

The updated guidance assumes full utilisation of the carrier’s NZ$50 million large events allowance.

Tower has recorded one large event so far in the current fiscal year, with estimated costs of around NZ$3 million from the Dunedin flooding in October.

In addition, Tower said it had received almost 250 claims from policyholders affected by the storms that hit New Zealand over the Easter weekend, indicating that the severe weather may exceed the insurer's NZ$2 million threshold for a large event.

The combined operating ratio is now expected to be within a range of 82% to 84%.

Guidance for gross written premium growth has been revised to mid-single digits, from the previous range of 7% to 12%.

“While Tower continues to see growth in customer numbers in the home insurance portfolio, a reduction in average premiums has contributed to lower-than-expected GWP growth. This reduction is due to a higher proportion of lower risk new house insurance and motor policies, as well as more competitive pricing in the New Zealand market, which benefits consumers,” it said.

Shares in Tower rose 1.94% on Wednesday, closing the session at A$1.33 apiece.

Tower’s shares are listed on both the NZX and ASX and are currently trading more than 8.6% higher in the year to date.