Tower forges five-year insurance partnership with Kiwibank

Tower Limited has entered a five-year referral agreement with Kiwibank to provide general insurance products to the bank’s retail customers.

Under this agreement, Kiwibank customers will insure their assets directly with Tower through policies branded by the insurance company.

Tower Limited’s referral agreement with Kiwibank

Tower CEO Blair Turnbull said the deal aligns with the insurer’s strategic goal of growing its home insurance portfolio.

“We’re thrilled about the opportunity to welcome Kiwibank customers to Tower and to be joining forces with another Kiwi born and bred business,” he said. “This referral agreement presents a strategic opportunity for Tower and aligns with our focus on growing our home insurance portfolio.”

See LinkedIn post here.

“We’re excited about entering this new partnership with Tower and to be able to support our customers to have the right protection in place which goes to the heart of our purpose of Kiwi making Kiwi better off,” said Kiwibank chief executive Steve Jurkovich.

Tower already has referral agreements with several New Zealand organisations, such as the Kiwi Adviser Network, New Zealand Financial Services Group, and Trade Me.

No regulatory approvals are required for the agreement to proceed.

Tower’s half-year earnings in 2024

The agreement with Kiwibank follows the release of Tower’s financial results for the half-year ending March 31, 2024 (HY24).

The insurer reported an underlying net profit after tax (NPAT) of NZ$36.6 million and a reported profit of NZ$36 million. This is a marked improvement from the NZ$5.1 million loss recorded in the same period last year, which was impacted by catastrophic events.

Key financial highlights for HY24 include:

• A 20% year-on-year increase in gross written premium (GWP) to NZ$291 million
• A reduction in the business-as-usual claims ratio to 49.7%, down from 51.1% in HY23
• A decrease in the management expense ratio (MER) to 31.3%, from 35.0% in HY23
• large event costs were -NZ$1.9 million, compared to NZ$37.3 million in HY23, due to a favourable revision of Vanuatu cyclone claims
• customer numbers fell by 1% to 309,000, partly due to a stricter risk appetite for high-theft motor vehicle models
• the combined operating ratio (COR), including large events, was 80.2%, down from 104.5% in HY23
• an interim dividend of 3 cents per share was declared

The improvement in the business-as-usual claims ratio was attributed to enhanced processes, a reduction in motor theft claims due to targeted underwriting actions, and calmer weather conditions, leading to fewer house claims.

In May, Tower received Canstar’s Home and Contents Insurer of the Year Award for 2024.