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Tower Insurance has reported a loss after tax of $11.6 million for the six months ended in March (HY18), a significant increase from the $8.2 million losses from the previous year.
According to Tower, its half-year result was impacted by the settlement of the Peak Re dispute and severe and unprecedented weather. Its underlying profit was $7.3 million, down from $8.1 million over the same period a year ago.
Despite this, Tower reported an increased half-year gross written premium (GWP) to $111.3 million, up 15.6% from HY17. Its management and sales expenses were up slightly at $52.1 million.
“The potential of the Tower business is now visible, with strong growth in GWP and customer numbers, controlled BAU claims costs, and contained expenses, all achieved against the backdrop of an unprecedented number of large and severe weather events which have affected the underlying result,” the firm said.
Tower said 2017 is one of the worst years for weather events in the past 25 years, with its claims costs hitting $74.4 million in HY18.
The insurer estimates costs of the April storms to be at $9 million, with the before tax, and after reinsurance impact, estimated to be around $3.8 million.
“The impact of all storms in 2018 already exceeds those of the prior full year, with the total cost estimated to be $24 million, with reinsurance absorbing $13.2 million,” it noted.
Additionally, Tower said it continues to make progress settling Canterbury claims. In the intervening six months, the number of open Canterbury earthquake claims left was cut by 159. A further 66 new claims from the Earthquake Commission (EQC) were received and 23 closed claims were reopened.
“Tower is transforming, and the continued improvements seen in the underlying business will deliver long-term shareholder value. With investment in a new IT platform being made, momentum will now accelerate,” the insurer added.
