Tower Limited has posted an underlying net profit after tax (NPAT) of $61.7 million for the six months to March 31, 2025.
This marks a substantial increase from $36.6 million during the same period in the prior year.
Reported net profit came in at $49.7 million, up from $36 million in the previous year.
The New Zealand insurer said the improved earnings were supported by favourable business-as-usual (BAU) claims experience, consistent premium growth, and cost control efforts.
The reported profit figure includes provisions for ongoing customer remediation and updated estimates related to Canterbury earthquake claims, reflecting continued over-cap claims from the Natural Hazards Commission (NHC).
Gross written premiums (GWP) for the period reached $297 million, up 4% year over year.
The insurer cited expansion in its home and contents insurance business as the primary growth driver, with that segment increasing 11% over the prior year.
However, average premiums were lower, attributed to a higher concentration of new policies covering lower-risk homes and vehicles, and increasing competition in the New Zealand market.
Tower’s motor portfolio saw a 4% decline in GWP, reflecting earlier decisions to limit underwriting in higher-risk areas. The company’s use of risk-based pricing also played a role in shaping the portfolio.
For new home insurance policies issued this year, 91% were rated as low or very low for flood exposure, compared to 86% a year earlier.
Tower’s BAU claims ratio declined to 38.1%, from 49.7% in the previous half-year.
The insurer attributed this to stable weather conditions, declining inflation, and fewer high-cost claims, particularly for total loss residential properties. Enhanced risk selection and process improvements also contributed to the improvement.
The management expense ratio (MER) improved to 30.4%, compared to 31.3% in HY24. The company pointed to operational efficiencies and premium growth as contributing factors. Tower said it continues to invest in its digital transformation and cost-efficiency programs.
Only one major event was recorded in the half – October 2024 flooding in Dunedin – resulting in a claims cost of $3 million.
The impact of Cyclone Tam, which occurred in April 2025, is expected to appear in second-half results with an estimated cost of $4 million.
Tower has allocated $50 million for large event claims for the full fiscal year.
Interim CEO Paul Johnston said Tower would continue refining its underwriting and pricing models to build resilience.
“Tower is focused on continuing to grow high-quality risks while enhancing the company’s resilience and claims performance. This year, we will expand risk-based pricing to include sea surge and landslide risks, helping our customers better understand their risks and how these factors impact their insurance pricing,” he said.
An interim dividend of 8 cents per share has been declared, fully imputed.
Tower’s financial strength rating of A- (Excellent) and long-term issuer credit rating of a- (Excellent) were reaffirmed by ratings agency AM Best, with both ratings carrying a stable outlook.
AM Best said the decision reflects Tower’s strong capital position, prudent reinsurance arrangements, and enterprise risk management framework.
It noted a drop in the regulatory solvency margin in 2023 but said it expects Tower to rebuild the buffer under the Interim Solvency Standard, supported by earnings retention.
Tower has revised its full-year profit guidance, projecting an underlying NPAT of between $70 million and $80 million, up from an earlier forecast range of $60 million to $70 million. It based the new projection on an assumption that the full $50 million weather-related claims allowance will be used.
