Tower Insurance Reports Record Profits, Expands Customer Base

Tower Insurance, a New Zealand-owned company, has announced record profits for the year ending September, driven by an increase in customer numbers and a significant rise in premium income. The company reported strong financial results, benefitting from a lower-than-average number of large claims during the period.

The insurance provider added 5,000 new customers, bringing its total to 318,000. This growth was attributed to a strategic focus on lower-risk policies and competitive pricing, which in turn boosted its housing insurance revenue. Chief Executive Paul Johnston credited the company’s success to its transformation efforts, emphasizing investments in digital platforms and a rigorous approach to underwriting.

Financial Highlights and Challenges

The financial results were not without challenges. Tower faced increased costs related to claims from the Canterbury earthquakes, as well as ongoing expenses associated with customer remediations and a provision for software impairment. Significant events, including the Dunedin floods in October 2024 and Cyclone Tam in April, were classified as large claims, costing the company approximately $7 million. Additionally, storms that impacted the country in late October are projected to incur costs of around $4.5 million, which will be reflected in next year’s financial accounts.

Johnston noted that the past two years were atypical and indicated that the favorable conditions contributing to these results may not persist. He stated, “We expect conditions that influenced the FY24 and FY25 results, such as relatively benign weather and prior-year rating flowing through the portfolio, to normalise in the coming year.”

Future Projections

Looking ahead, Tower Insurance has forecasted an underlying profit for the upcoming year between $55 million and $65 million. The company has also allocated $45 million to address potential large-disaster claims, signaling its preparedness for unforeseen events.

As Tower continues to navigate the complexities of the insurance market, its focus on efficiency, technology, and customer service remains paramount. The latest financial results underscore the company’s resilience and commitment to growth in a competitive landscape.