Large insurance claim events have dragged down Tower’s profits by about $8m. The insurer declared a profit after tax of $2.98m for the six months to 31 March, down from $11.1m for the same period last year.
Excluding large events, its underlying profit went from $17.1m to $18.2m.
Large event costs over the half-year were substantial, Tower chief executive Blair Turnbull said, costing up to $17.9m compared to $9.3m the previous year. Contributing large-claim events included $7.6m for the eruption of Tonga’s volcano and the resulting tsunami, $6.7m for rainstorms that hit the North Island in March, and $3.6m for cyclone Dovi, which hit Aotearoa in February.
Tower’s $40m reinsurance cover only kicks in once costs go above $20m in a year, Newstalk ZB reported.
"Tower is acutely aware of the ways climate change is increasingly affecting our communities,” Turnbull said. “We are responding. By expanding our risk-based pricing policies and focusing on a high-quality reinsurance programme, we ensure Tower remains in the strongest possible position to continue protecting both our customers' and shareholders' interests."
In November, Tower brought in risk-based pricing for floods, transitioning 70,000 customers to the new pricing model since then.
Despite making less after-tax profits than before, Tower's gross written premiums rose from $194.6m to $216.1m, while its net earned premiums rose from $167.8m to $173.7m. It also increased its customers by 6% to 312,000.
"By building deeper, more engaging relationships with customers, Tower is experiencing consistent growth in both premium and customer numbers year-on-year,” Turnbull said.