Tower Limited Analysis

Overview

Tower operates as a prominent private general insurer in New Zealand and across five Pacific Island countries.

As New Zealand's largest direct-to-consumer insurer, Tower is unique in servicing the vast majority of its more than 300,000 customers via its direct channels. The insurer also has a rapidly growing partnership business, which secures mutually beneficial business partnerships that drive policy sales and growth.

Tower has a rich history that spans more than 150 years, starting as the Government Life Insurance Office in 1896. In 1987, it was renamed Tower Corporation, and in 1990 ownership was conferred to its policyholders. The company was one of the first mutual insurers to become a public company when it listed on the New Zealand and Australian stock exchanges in 1999.

In 2006, the New Zealand and Australian businesses were separated, and Tower has since sold its Australian business.

Today, Tower's focus is on providing simple and rewarding insurance services that customers value. This is achieved through strategies such as customer innovation and investment in large-scale digital transformation, which has enabled the business to evolve rapidly.

By joining forces with like-minded partners, Tower has created a leading range of simple products to suit the modern lifestyles of Kiwi and Pacific communities, including motor EVs, home contents, boat, travel, pet, rural and small business insurance.

Tower is actively managing volatility from climate change through its financial planning and reinsurance. The insurer is also managing its own environmental impacts. Tower was the first New Zealand general insurer to implement address-level risk-based pricing for large events such as earthquakes and flooding.

In 2020, Tower underwent an amalgamation to simplify its corporate structure in New Zealand. Today, Tower Limited remains listed on the NZX, and is listed in Australian as a foreign exempt entity under, in both countries under the ticker TWR.

Performance

The following information was extracted from Tower Limited's Half year results, released 20 May 2025

Tower reports strong half year profit

Kiwi insurer, Tower Limited (NZX/ASX: TWR) today reported its results for the half year to 31 March 2025, recording an underlying net profit after tax (underlying NPAT) of $61.7m and a reported profit of $49.7m.

The strong results were due to continued improvements in business-as-usual (BAU) claims performance, continued gross written premium (GWP) growth and improvements in the management expense ratio (MER). Reported profit includes provisions for ongoing customer remediation-related costs and an increase in Canterbury earthquake cost estimates, due to Tower continuing to receive more over-cap claims than expected from the Natural Hazards Commission (NHC).

Summary of HY25:

• Underlying profit $61.7m vs $36.6m in HY24

-Reported profit $49.7m vs $36m in HY24

• GWP $297m, up 4% on HY24
• BAU claims ratio 38.1% vs 49.7% in HY24
• MER improved to 30.4% vs 31.3% in HY24

-Large events costs $3m vs -$1.9m in HY24

-Customer numbers grew to 312,000, up from 309,000 in HY24

• Combined operating ratio (COR) 69.7% vs 80.2% in HY24
• Fully imputed interim dividend of 8 cents per share.