Tower updates FY25 guidance

Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Classification: Highly Sensitive

22 April 2025

Tower updates FY25 guidance

Kiwi insurer Tower (NZX/ASX: TWR) has today updated its earnings guidance on underlying net profit
after tax (underlying NPAT) for the year ending 30 September 2025.

Full year underlying NPAT is revised upwards to a range of between $70m and $80m, from the
previously advised range of between $60m and $70m. This assumes full utilisation of the $50m large
events allowance. So far in FY25, Tower has recorded one large event - the Dunedin flooding event in
October, with an estimated cost of around $3m. Tower is supporting customers affected by the storms
that impacted New Zealand over Easter weekend, and has so far received almost 250 Claims. This
means this storm may exceed the $2m threshold for a large event for Tower.

The upward revision of underlying NPAT guidance reflects continued better-than-expected business-as-
usual (BAU) claims performance. This is due to an unusually prolonged period of favourable weather, a
lower inflationary environment, fewer total loss house claims, and enhanced risk selection.

Guidance for gross written premiums (GWP) is revised to mid-single digit, from the previous range of 7%
and 12%. While Tower continues to see growth in customer numbers in the home insurance portfolio, a
reduction in average premiums has contributed to lower-than-expected GWP growth. This reduction is
due to a higher proportion of lower risk new house insurance and motor policies, as well as more
competitive pricing in the New Zealand market, which benefits consumers.

Guidance for the management expense ratio (MER) is revised to <31% from the previously advised
guidance of <29%. While MER continues to trend downwards, it is currently tracking above target. This
results from the reduced GWP flowing through to the ratio and the strategic acceleration of investments
aimed at enhancing growth, improving efficiencies and strengthening the business. Tower expects MER
to continue to reduce in the medium term as benefits from strategic initiatives are realised.
Guidance for the combined operating ratio is now expected to be within a range of 82-84%.
Reported profit will be impacted by additional non-underlying costs, including ongoing customer
remediation costs and an increase in the Canterbury earthquake provision. This increase is due to an
unexpected rise in new over-cap claims received from the Natural Hazards Commission (NHC).
Canterbury earthquake costs continue to challenge the insurance industry some 15 years after the
events due to the ability to reopen historic claims after an extended period. This situation is compounded
by external factors including the significant volume of reopened claims from undiscovered damage and
inadequate repairs, and inflation since 2010-2011.

Tower will provide further details on its performance at its half-year results announcement on 20 May
2025.

ENDS

This announcement has been authorised by:

Michael Stiassny
Chair
Tower Limited

For media enquiries, please contact:
Kayla Dalrymple
External Communications Manager
+64027 951 3710
kayla.dalrymple@tower.co.nz

Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Classification: Highly Sensitive

For investor enquiries, please contact:
James Silcock
Head of Strategy, Planning and Investor Relations
+64 22 395 9327
James.silcock@tower.co.nz