Tower Limited, a New Zealand-based insurer listed on both the NZX and ASX, has updated its financial outlook for the fiscal year ending Sept. 30, 2025.
The company now anticipates its underlying net profit after tax (NPAT) to fall between $100 million and $110 million, provided there are no significant large-scale events in September.
This revised forecast is higher than Tower’s earlier projection of $70 million to $80 million, which had assumed the full use of a $50 million allowance for large events.
As of now, Tower has incurred $7 million in large event costs for the current financial year. If this figure remains unchanged, the company expects to return approximately $31 million ($43 million before tax) to its underlying NPAT at year-end.
Tower’s customer numbers have increased by 5% so far this year, bringing the total to 318,000.
Policy growth stands at 4%, with the most notable expansion in the New Zealand house insurance segment, which reported a 10% increase in policy count. The company attributes this growth to a strategic emphasis on the house insurance market.
Despite the growth in customer and policy numbers, Tower has observed a reduction in average premiums. This trend is linked to a higher proportion of new policies covering lower-risk properties and heightened competition within the New Zealand insurance market.
As a result, Tower has adjusted its gross written premium (GWP) growth guidance to a range of 2% to 3%, down from its previous mid-single digit forecast.
The company has also revised its management expense ratio (MER) guidance to around 31%, compared to the earlier estimate of less than 31%.
This change reflects the impact of lower GWP and ongoing investments in technology and growth initiatives, including customer acquisition.
Tower reports that its business-as-usual (BAU) claims ratio remains consistent with expectations.
Tower plans to provide a comprehensive update on its FY25 performance during its full-year results announcement scheduled for November.
For the half-year ending March 31, 2025, Tower reported an underlying NPAT of $61.7 million, an increase from $36.6 million in the same period last year.
The company’s reported net profit reached $49.7 million, up from $36 million a year earlier.
Tower attributes the improved results to favourable BAU claims experience, steady premium growth, and ongoing cost management.
Gross written premiums for the period were $297 million, reflecting a 4% year-over-year increase.
Growth was primarily driven by the home and contents insurance segment, which expanded by 11%.
However, average premiums decreased due to a larger share of new, lower-risk policies and competitive market conditions.
The motor insurance portfolio experienced a 4% decline in GWP, a result of earlier decisions to limit underwriting in higher-risk areas and the company’s continued use of risk-based pricing.
Of the new home insurance policies issued this year, 91% were rated as low or very low for flood exposure, compared to 86% in the previous year.
In a previous statement, interim CEO Paul Johnston stated that Tower will continue to refine its underwriting and pricing models.
“Tower is focused on continuing to grow high-quality risks while enhancing the company’s resilience and claims performance. This year, we will expand risk-based pricing to include sea surge and landslide risks, helping our customers better understand their risks and how these factors impact their insurance pricing,” he said.
