Tower Limited has revised its financial outlook for the year ending Sep. 30, 2025 (FY25), increasing its forecast for underlying net profit after tax (NPAT) to between $60 million and $70 million.
This represents an upward revision from the previous range of $50 million to $60 million and is based on the assumption that the insurer’s $50 million large events allowance will be fully utilised.
Thus far in FY25, Tower has recorded one significant weather event – the Dunedin floods in October – with an estimated financial impact of approximately $3 million.
The updated profit guidance reflects lower-than-expected claims costs in the first quarter, driven by stable weather patterns, declining inflation, fewer total loss house claims, and refinements in risk assessment.
Tower also adjusted its gross written premium (GWP) growth expectations, lowering its forecast to between 7% and 12%, down from the earlier projection of 10% to 15%.
While the insurer reported customer growth in the first three months of the financial year, an increase in lower-risk home and motor insurance policies has resulted in a lower average premium, affecting overall premium growth.
Additionally, the company updated its combined operating ratio (COR) guidance, expecting it to fall within the 84% to 86% range – an improvement from the previous estimate of 87% to 89%.
Tower plans to provide further insights into its financial performance at its annual shareholder meeting scheduled for Feb. 11.
For the financial year ending Sep. 30, 2024 (FY24), Tower reported an underlying NPAT of $83.5 million, reflecting a recovery from the $1 million loss recorded in FY23. The insurer’s reported net profit stood at $74.3 million for the year.
The company attributed the profit increase to premium growth, improved claims management, and operational efficiencies. GWP rose by 15% year-on-year to $595 million, while the business-as-usual (BAU) claims ratio declined to 48.1% from 55.1% in the prior year. The management expense ratio (MER) also fell, reaching 31.4%, compared to 32% in FY23.
Tower reported no major weather-related disasters during FY24, significantly reducing its large event costs to negative $2.3 million, compared to $55.6 million in the prior year. Customer numbers declined by 2% to 305,000, with the company citing stricter risk selection policies for high-theft motor vehicle models as a contributing factor.
CEO Blair Turnbull, who will step down from his role this month, said the results reflected premium growth, a decrease in motor theft claims, and lower weather-related losses.
“This strong result is underpinned by our strategy of delivering simple and rewarding customer experiences combined with our use of digital technology and data,” he said.
