Tower Limited generated underlying net profit after tax (NPAT) of $107.2 million for the fiscal year ended Sept. 30, 2025 (FY25), with reported profit of $83.7 million. The company’s total premium income reached $600 million, while its customer base expanded to 318,000 policies. These increases reflect year-over-year gains driven by lower claims costs, adjusted underwriting practices, and portfolio expansion across residential insurance segments.
The underlying NPAT increase of $23.7 million compared to FY24’s $83.5 million represents a 28% earnings improvement. Reported profit similarly expanded to $83.7 million from the prior year’s $74.3 million, although this figure incorporates adjustments for revised Canterbury seismic claims assessments, customer remediation expenses, and a technology system write-down. The insurer's total premium income climbed 2% on a year-over-year basis, while policy count rose 4%.
In response to financial performance, the board authorised a fully imputed final dividend payment of 16.5 cents per ordinary share. Combined with interim distributions, full-year dividend payments totalled 24.5 cents per share.
Chief executive Paul Johnston commented on the results: “This is an exceptional result, underpinned by Tower’s transformation, driven by investment in our digital platform and continued focus on underwriting discipline, technology, data, and efficiency. These actions demonstrate Tower’s commitment to delivering sustainable growth and building a resilient, customer-focused business for the future. However, it is worth noting that 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.”
The business-as-usual (BAU) claims ratio contracted to 41% from its prior-year level of 48%. Contributing factors included stable weather patterns throughout the period, moderated inflation pressures, reduced vehicle theft incidents, and adjustments to underwriting methodologies and claims processes. Additionally, prior-period rate increases flowing through the active portfolio contributed to ratio compression. The company’s combined operating ratio was 74.1% versus 79% in the preceding year.
Administrative expenses remained consistent relative to revenue, with the management expense ratio holding at 31.4%. Productivity adjustments were deployed toward digital transformation and market expansion efforts. Tower introduced an artificial intelligence-powered customer service system using Amazon Connect infrastructure during the year, which produced early operational results in altering processes and affecting frontline workload requirements.
The insurer increased its application of advanced pricing models based on granular location-level risk assessment. This approach resulted in 91% of newly underwritten residential properties being classified as low or very low flood hazard exposure, compared to 87% the prior year. The pricing framework was expanded to incorporate sea surge and landslide risk factors during the period.
Residential insurance policy volumes grew at an 11% rate, reflecting management’s prioritisation of the domestic property segment. Premium revenue from residential accounts expanded 10%, while motor insurance premium declined 5% due to competitive pricing adjustments, although new motor policy volumes began increasing as the year progressed.
The company formalised a distribution arrangement with Westpac NZ whereby the bank’s retail customer base will gain access to Tower’s general insurance offerings commencing July 2026. Tower launched a revised brand identity and marketing initiative during the period.
Weather events resulted in $7 million of claim costs during FY25, stemming from the Dunedin inundation in October 2024 and Cyclone Tam in April 2025. Management estimates that storms occurring in late October 2025 will generate approximately $4.5 million in claims expense, to be reflected in the subsequent fiscal year.
For the fiscal year beginning Oct. 1, 2025, the insurer has provided guidance on underlying NPAT projected between $55 million and $65 million, assuming full utilisation of its $45 million large events reserve. Premium volume expansion is anticipated in the range of 5% to 10%, supported by changes in market share and the Westpac partnership commencing July 2026. Administrative expense ratio is expected to fluctuate between 31% and 32% as technology investments are offset by expenses associated with premium volume expansion.
Tower executed renewal of its reinsurance protections covering the subsequent financial year across its New Zealand and broader Pacific basin operations. The revised program encompasses all major product lines including residential, auto, marine, and specialty coverages.
Reinsurance costs are forecast to represent 10.7% of total premium written, compared to 13.3% in the preceding period. This decrease in reinsurance expenditure will be partially offset by lower reinsurance claim recoveries, as certain property exposures transition from quota share arrangements to self-retention structures. The maximum catastrophe coverage has been increased to $915 million, up from the $800 million threshold in FY25. Protection for secondary catastrophic events continues at $85 million.
