SYDNEY, AUSTRALIA: Tower Limited, a New Zealand-based insurance company, has announced its full year results for the year ending 30 September 2023. The company reported a loss of $1.2 million, compared to a profit of $18.9 million in the previous year, mainly due to the impact of catastrophic weather events that cost $55.6 million in claims.

However, the company also achieved improved revenue growth and expense control, and continued to execute on its strategy of simplification and digitisation.

The company’s gross written premium (GWP) increased by 17% to $527 million, driven by strong rating actions and organic growth in New Zealand, where GWP rose by 19%.

The company also increased its customer base by 4% to 321,000, with 65% of its GWP growth coming from its digital channels.

The company’s management expense ratio (MER) improved to 32.2%, down from 36% in the previous year, as the company benefited from its investments in digital technology and its operational hub in Suva, Fiji.

The company’s business as usual (BAU) claims ratio, however, increased to 55.5%, up from 48.9% in the previous year, due to inflation and a higher frequency of motor claims.
Tower Limited said it is taking targeted rating and underwriting actions to address these challenges.

The company’s underlying profit, which excludes the impact of large events and other one-off items, was $7.6 million, down from $27.3 million in the previous year.

Tower Limited has successfully renewed its reinsurance programme, which provides $750 million of catastrophe cover and a prepaid third event cover up to $75 million, to protect it from the volatility of large events in the next financial year.

Tower CEO, Blair Turnbull, said, “In the financial year Tower has navigated catastrophic weather events, widespread inflation and increasing crime. At the same time, we are continuing to grow and manage expenses while executing on our strategy.

In the year ahead, Tower will continue its focus on delivering targeted customer and premium growth while further improving efficiencies and continuing to streamline the business.

We will also build on our leading risk-based pricing by expanding our model to include landslide and coastal hazards.

While we have certainly faced significant challenges this financial year, our underlying result demonstrates resilience and strategic delivery which positions Tower well for long-term sustainable growth and performance.”

The company said it will not pay a full year dividend for the 2023 financial year, but will consider restarting dividends in the next financial year.

The company also provided guidance for the 2024 financial year, forecasting an underlying net profit after tax of between $22 million and $27 million, a GWP growth of between 10% and 15%, a MER of between 30% and 32%, and a combined operating ratio of 95% to 97%.