Tower reports strong half year profit
20 May 2025
Tower Limited
Half Year 2025 Results for Announcement to Market
In accordance with NZX Listing Rule 3.5.1 we enclose the following for release to the market in relation to Tower
Limited’s (NZX/ASX: TWR) Half Year 2025 Results:
1 Media Release
2 Results Announcement
3 Interim Financial Statements (including Independent Auditor’s Review Report)
4 Results Announcement Presentation
5 Results Announcement Call Script
6 NZX Distribution Notice
Tower’s Chairman Michael Stiassny, Interim Chief Executive Officer Paul Johnston and Interim Chief Financial
Officer Angus Shelton will discuss the half year results at 10:00am New Zealand time today.
Tower’s Board confirms for the purposes of ASX Listing Rule 1.15.3 that Tower continues to comply with the NZX
Main Board Listing Rules.
ENDS
This announcement has been authorised by the Tower Board.
Paul Johnston
Interim Chief Executive Officer
Tower Limited
For media enquiries, please contact in the first instance:
Emily Davies
Head of Corporate Affairs and Sustainability
+64 21 815 149
emily.davies@tower.co.nz
For investor queries, please contact in the first instance:
James Silcock
Head of Strategy, Planning and Investor Relations
+64 22 395 9327
james.silcock@tower.co.nz
Market Information
NZX Limited
Level 1, NZX Centre
11 Cable Street
Wellington
New Zealand
Company Announcements Office
ASX Limited
Exchange Centre
Level 6, 20 Bridge Street
Sydney NSW 2000
Australia
---
Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Incorporated in New Zealand
20 May 2025
Tower reports strong half year profit
Kiwi insurer, Tower Limited (NZX/ASX: TWR) today reported its results for the half year to 31
March 2025, recording an underlying net profit after tax (underlying NPAT) of $61.7m and a
reported profit of $49.7m.
The strong results were due to continued improvements in business-as-usual (BAU) claims
performance, continued gross written premium (GWP) growth and improvements in the
management expense ratio (MER). Reported profit includes provisions for ongoing customer
remediation-related costs and an increase in Canterbury earthquake cost estimates, due to
Tower continuing to receive more over-cap claims than expected from the Natural Hazards
Commission (NHC).
Summary of HY25:
• Underlying profit $61.7m vs $36.6m in HY24
• Reported profit $49.7m vs $36m in HY24
• GWP $297m, up 4%
1
on HY24
• BAU claims ratio 38.1% vs 49.7% in HY24
• MER improved to 30.4% vs 31.3% in HY24
• Large events costs $3m vs -$1.9m in HY24
• Customer numbers grew to 312,000, up from 309,000 in HY24
• Combined operating ratio (COR) 69.7% vs 80.2% in HY24
• Fully imputed interim dividend of 8 cents per share.
Enhanced risk selection and competitive pricing
GWP growth of 4% to $297m is attributed to customer growth in the New Zealand home and
contents insurance portfolio which grew GWP by 11% year-on-year. However, this growth
was tempered by reduced average premiums, due to a higher proportion of lower-risk new
policies for house and motor insurance, along with more competitive pricing in the New
Zealand market. The motor portfolio saw a 4% year-on-year decline in GWP due to rate
reductions and slower policy growth following actions to tighten Tower’s risk appetite in the
prior year.
Tower’s risk-based pricing approach in the house portfolio continues to reduce Tower’s risk
exposure to flooding. Ninety-one per cent of new house insurance policies in the year were
rated by Tower as low or very low for flood risk, up from 86% in the prior year.
Continued strong BAU claims performance
1
Excluding divested portfolios. Prior year numbers have been adjusted to exclude sold and discontinued
portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New Zealand
commercial rural portfolio.
Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Incorporated in New Zealand
The BAU claims ratio has decreased substantially to 38.1% from 49.7% for the same period
last year. This improvement is due to a prolonged period of favourable weather, easing
inflation, fewer total loss house claims, claims process improvements and enhanced risk
selection.
Reducing MER
The MER has improved year-on-year, reducing to 30.4% in the half year from 31.3% in the
prior comparable period due to premium growth, operational efficiencies, and cost control.
Tower has accelerated investment in initiatives aimed at future growth, improving
efficiencies and further strengthening the business.
One large event recorded in HY25
Tower’s large events costs at the half year were $3m due to the Dunedin flooding event in
October 2024. The April 2025 Cyclone Tam flooding event in New Zealand will be recorded
as a large event in the second half with an estimated cost of $4m. Tower’s large events
allowance for FY25 is $50m.
Tower Interim CEO, Paul Johnston says, “These positive first half results reflect Tower’s
commitment to delivering sustainable, profitable growth by upholding core insurance
fundamentals: robust risk selection and pricing, and claims management.
“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 says.
Ends
This announcement has been authorised by Tower Limited Board Chair, Michael Stiassny.
For media enquiries, please contact:
Emily Davies
Head of Corporate Affairs and Sustainability
+64 21 815 149
emily.davies@tower.co.nz
For investor enquiries, please contact:
James Silcock
Head of Strategy, Planning and Investor Relations
+64 22 395 9327
James.silcock@tower.co.nz
---
Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at June 2023
Please do not amend or delete individual rows. As this template relates to prescribed content, changes to content
should only be made where it is clearly indicated that this is permitted, otherwise, if an Issuer considers a particular
element does not apply, mark the row as N/A, Any other changes to this prescribed form must first be approved by
NZX as required under NZX Listing Rule 3.26.1.
Results for announcement to the market
Name of issuer Tower Limited
Reporting Period 6 months to March 2025
Previous Reporting Period 12 months to September 2024
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$295,820 10%
Total Revenue $295,820 8%
Net profit/(loss) from
continuing operations
$49,740 53%
Total net profit/(loss) $49,740 38%
Interim/Final Dividend
Amount per Quoted Equity
Security
8.0 cents
Imputed amount per Quoted
Equity Security
Not Applicable.
Record Date 12 June 2025
Dividend Payment Date 26 June 2025
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.76 $0.62
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Growth in revenue is due to customer growth in the New Zealand
home and contents portfolio, partly tempered by reduced average
premiums.
The growth in profit reflected strong claims performance, along
with revenue growth and an improvement in the management
expense ratio, partly offset by costs of customer remediations and
an increase in cost estimates for the Canterbury earthquakes.
Please refer to the 2025 half year results announcement
presentation for further information.
Authority for this announcement
Name of person
authorised
to make this announcement
Tania Pearson, General Counsel & Company Secretary
Contact person for this
announcement
Emily Davies, Head of Corporate Affairs and Sustainability
Contact phone number +64 21 815 149
Contact email address emily.davies@tower.co.nz
Date of release through MAP
20 May 2025
---
Tower Limited
Consolidated
interim financial statements
for the half year ended 31 March 2025
Tower Limited
Consolidated interim financial statements
Interim Financial Statements
Consolidated statement of comprehensive income2
Consolidated balance sheet3
Consolidated statement of changes in equity4
Consolidated statement of cash flows5
Notes to the interim financial statements
1Overview6
1.1About this report6
1.2Critical accounting judgements and estimates7
1.3Impact of new accounting standards7
1.4Segmental reporting8
2Insurance and reinsurance contracts10
2.1Insurance and reinsurance contracts10
2.2Reconciliation of insurance assets and liabilities11
2.3Reconciliation of reinsurance assets and liabilities13
3Investments14
3.1Investment income14
3.2Investments14
4Risk Management15
4.1Capital management risk15
5Capital structure16
5.1Contributed equity16
5.2Earnings per share16
5.3Dividends16
6Other balance sheet items17
6.1Intangible assets17
6.2Provisions18
7Other information19
7.1Notes to the consolidated statement of cash flows19
7.2Tower Long Term Incentive Plan19
7.3Contingent liabilities19
7.4Capital commitments19
7.5Subsequent events19
1
Tower Limited
Consolidated statement of comprehensive income
For the Half Year Ended 31 March 2025
$ thousandsNote31-Mar-2531-Mar-24
Insurance revenue295,820 269,434
Insurance service expense(194,087)(184,319)
Insurance service result before reinsurance contracts held101,733 85,115
Net expense from reinsurance contracts held(40,928)(44,846)
Insurance service result60,805 40,269
Investment income3.110,129 10,032
Investment expense(153)(71)
Net investment income9,976 9,961
Finance expense from insurance contracts issued(1,430)(3,872)
Finance income from reinsurance contracts held392 2,167
Net insurance finance expense(1,038)(1,705)
Net insurance and investment result69,743 48,525
Other income2,131 778
Other operating expenses(1,309)(1,021)
Finance costs(397)(498)
Profit before taxation from continuing operations70,168 47,784
Tax expense(20,428)(15,368)
Profit after taxation from continuing operations49,740 32,416
Profit after taxation from discontinued operations-3,620
Profit after taxation for the half year attributed to shareholders49,740 36,036
Items that may be reclassified to profit or loss
Currency translation differences2,256 (95)
Other comprehensive income/(loss) net of tax2,256 (95)
Total comprehensive profit for the half year attributed to shareholders51,996 35,941
Earnings per share:
Basic earnings per share (cents) for continuing operations5.213.2 8.5
Diluted earnings per share (cents) for continuing operations5.213.0 8.5
Basic earnings per share (cents) for profit attributable to shareholders5.213.2 9.5
Diluted earnings per share (cents) for profit attributable to shareholders5.213.0 9.4
The above statement should be read in conjunction with the accompanying notes.
2
Tower Limited
Consolidated balance sheet
As at 31 March 2025
$ thousandsNote31-Mar-2530-Sept-24
Assets
Cash and cash equivalents7.162,932 75,390
Investments3.2351,529 367,506
Receivables17,367 19,799
Current tax assets1,055 13,222
Reinsurance contract assets2.141,161 35,503
Deferred tax assets1,308 382
Right-of-use assets18,595 19,990
Property, plant and equipment 6,448 6,735
Intangible assets6.196,023 96,621
Total assets596,418 635,148
Liabilities
Payables24,075 32,287
Insurance contract liabilities2.1163,417 177,569
Current tax liabilities6,520 606
Provisions6.216,703 21,959
Lease liabilities27,257 28,855
Deferred tax liabilities15,020 13,716
Total liabilities252,992 274,992
Net assets343,426 360,156
Equity
Contributed equity5.1416,690 460,734
Retained earnings29,486 4,428
Reserves(102,750)(105,006)
Total equity343,426 360,156
The above statement should be read in conjunction with the accompanying notes.
The financial statements were approved for issue by the Board on 20 May 2025.
Michael P StiassnyMike Cutter
ChairmanDirector
3
Tower Limited
Consolidated statement of changes in equity
For the Half Year Ended 31 March 2025
$ thousands
Note
Contributed
equity
Retained
earnings/
(losses)
ReservesTotal Equity
Half year ended 31 March 2025
Balance as at 30 September 2024460,734 4,428 (105,006) 360,156
Comprehensive income
Profit for the half year -49,740-49,740
Currency translation differences--2,256 2,256
Total comprehensive income/(loss)-49,7402,256 51,996
Transactions with shareholders
Dividends paid
5.3
-(24,682)-(24,682)
Share rights issued under Tower Long-Term Incentive Plan
5.1
1,449 --1,449
Capital return
5.1
(45,493)--(45,493)
Total transactions with shareholders(44,044)(24,682)-(68,726)
At the end of the half year416,690 29,486 (102,750)343,426
Half year ended 31 March 2024
Balance as at 30 September 2023460,315 (58,473)(104,108) 297,734
Comprehensive income
Profit for the half year -36,036-36,036
Currency translation differences - - (95)(95)
Total comprehensive income/(loss)-36,036(95)35,941
Transactions with shareholders
Share rights issued under Tower Long-Term Incentive Plan74 - - 74
Total transactions with shareholders74 - - 74
At the end of the half year460,389 (22,437)(104,203)333,749
The above statement should be read in conjunction with the accompanying notes.
Attributed to Shareholders
4
Tower Limited
Consolidated statement of cash flows
For the Half Year Ended 31 March 2025
$ thousandsNote31-Mar-2531-Mar-24
Cash flows from operating activities
Premiums received for insurance contracts issued294,835 271,105
Insurance acquisition costs paid(36,540)(31,715)
Reinsurance paid(67,464)(47,401)
Interest received 9,564 8,882
Fee and other income received2,578 2,649
Insurance claims paid and other insurance service expenses(166,252)(229,973)
Reinsurance recoveries received21,617 58,623
Other operating payments(130)(1,060)
Income tax paid(536)(665)
Operating activities cash flow from discontinued operations-4,899
Net cash inflow from operating activities 57,672 35,344
Cash flows from investing activities
Proceeds from sale of interest bearing investments298,092 168,851
Payments for purchase of interest bearing investments(287,408)(176,341)
Payments for purchase of intangible assets (9,148)(8,031)
Proceeds from sale of property, plant & equipment-50
Payments for purchase of property, plant & equipment(719)(1,648)
Net proceeds from sale of discontinued operation-1,912
Investing activities cash flow from discontinued operations-(44)
Net cash inflow/(outflow) from investing activities 817 (15,251)
Cash flows from financing activities
Dividends paid5.3(24,682) -
Payments for capital return5.1(45,493) -
Payments relating to lease liabilities(2,519)(2,698)
Financing activities cash flow from discontinued operations-(11)
Net cash outflow from financing activities (72,694)(2,709)
Net (decrease)/increase in cash and cash equivalents(14,205)17,384
Effect of foreign exchange rate changes1,747 (146)
Cash and cash equivalents at the beginning of the half year 75,390 65,311
Cash and cash equivalents at the end of the half year 62,932 82,549
Cash from discontinued operations-3,135
Cash and cash equivalents at the end of the half year from continuing
operations
7.162,932 79,414
The above statement should be read in conjunction with the accompanying notes.
5
Tower Limited
Notes to the consolidated financial statements
1
1.1About this Report
a.Entities reporting
b.Statutory base
c.Basis of preparation
d.Accounting policies
The principal accounting policies adopted in the preparation of the interim financial statements are consistent with
those of the audited annual financial statements for the year ended 30 September 2024.
Overview
The interim financial statements for the six months ended 31 March 2025 are unaudited.
This section provides information that is helpful to an overall understanding of the interim financial statements and
the areas of critical accounting judgements and estimates included in the interim financial statements. It also
includes a summary of Tower's operating segments.
Tower Limited is a company incorporated in New Zealand under the Companies Act 1993 and listed on the NZX
Main Board and the Australian Securities Exchange. The Company is a reporting entity under Part 7 of the Financial
Markets Conduct Act 2013.
The interim financial statements of the Group have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (NZ GAAP), and for the purposes of NZ GAAP, the Group is a for-profit entity. They
comply with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and consequently
include a lower level of disclosure than is required for annual financial statements.
The interim financial statements should be read in conjunction with the annual financial statements for the year
ended 30 September 2024, which have been prepared in accordance with International Financial Reporting
Standards Accounting Standards (IFRS Accounting Standards) and New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS).
The interim financial statements presented are those of Tower Limited and its subsidiaries (the Group). The address
of the Group's registered office is 136 Fanshawe Street, Auckland, New Zealand.
6
Tower Limited
1.2
Premium allocation approach (PAA) eligibilityAnnual Report (30 September 2024) Note 2.1
Identification of groups of onerous contractsAnnual Report (30 September 2024) Note 2.1
Liability for incurred claims and reinsurance assets for incurred
claims, including risk adjustment and the confidence level used
Annual Report (30 September 2024) Note 2.4
Annual Report (30 September 2024) Note 2.7
Annual Report (30 September 2024) Note 6.2
Annual Report (30 September 2024) Note 6.3a(ii)
1.3Impact of new accounting standards
Issued and not yet effective
Critical accounting judgements and estimates
- Insurance and reinsurance contracts
There are amendments and interpretations which have been issued but are not yet effective. The Group expects to adopt
new standards when they become mandatory. NZ IFRS 18 Presentation and Disclosure in Financial Statements (NZ IFRS
18) will replace NZ IAS 1 Presentation of Financial Statements and may have a material impact on Tower's disclosures. NZ
IFRS 18 has been issued but is not effective for Tower until 1 October 2027. Tower has not yet completed an assessment
of the impact of adopting NZ IFRS 18.
- Intangible assets
- Lease liabilities (incremental borrowing rate)
- Compliance and remediation provision
In preparing these interim financial statements management is required to make estimates and related assumptions
about the future. The estimates and related assumptions are based on experience and other factors that are considered
to be reasonable, and are reviewed on an ongoing basis. Revisions to the estimates are recognised in the period in which
they are revised, or future periods if relevant. The key areas in which estimates and related assumptions are applied are
as follows:
7
Tower Limited
1.4Segmental reporting
a.Operating segments
b.Financial performance
$ thousands
New ZealandPacific IslandsOtherTotal
Half year ended 31 March 2025
Insurance revenue274,340 21,480 -295,820
Insurance service (expense)/income(176,573)(17,619)105 (194,087)
Net (expense)/income from reinsurance contracts held(38,469)(2,527)68 (40,928)
Insurance service result59,298 1,334 173 60,805
Net investment income9,670 306 -9,976
Net insurance finance expense(1,038) - - (1,038)
Net insurance and investment result67,930 1,640 173 69,743
Other income1,772 359 -2,131
Other operating expenses(1,254)(55)-(1,309)
Finance costs(300)(97)-(397)
Profit/(loss) before taxation68,148 1,847 173 70,168
Tax expense(19,658)(644)(126)(20,428)
Profit/(loss) after taxation48,490 1,203 47 49,740
Tower operates in two geographical segments, New Zealand and the Pacific region. New Zealand comprises the
general insurance business underwritten in New Zealand. Pacific Islands comprises the general insurance business
underwritten in the Pacific by Tower subsidiaries and branch operations. Other contains balances relating to
Tower Services Limited and group diversification benefits.
The Group does not derive revenue from any individual or entity that represents 10% or more of the Group's total
revenue.
The financial performance for Pacific Islands operating segment excludes the disposal groups in the comparative.
Intercompany transactions with the disposal group are eliminated within continuing operations.
Information is provided by operating segment to assist an understanding of the Group's performance. Operating
segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker (the Chief Executive Officer) who reviews the operating results on a regular basis and makes decisions on
resource allocation and assessing performance.
8
Tower Limited
1.4Segmental reporting (continued)
b.Financial performance (continued)
$ thousands
New ZealandPacific IslandsOtherTotal
Half year ended 31 March 2024
Insurance revenue248,280 21,154 -269,434
Insurance service expense(169,213)(14,844)(262)(184,319)
Net (expense)/income from reinsurance contracts held(44,407)(489)50(44,846)
Insurance service result34,660 5,821 (212)40,269
Net investment income9,472 489 -9,961
Net insurance finance expense(1,705) - - (1,705)
Net insurance and investment result42,427 6,310 (212)48,525
Other income616 162 -778
Other operating expenses(999)(22)-(1,021)
Finance costs(409)(89)-(498)
Profit/(loss) before taxation from continuing operations41,635 6,361 (212)47,784
Tax expense(11,568)(3,800)-(15,368)
Profit/(loss) after taxation from continuing operations30,067 2,561 (212)32,416
c.Financial position
$ thousands
New ZealandPacific IslandsOtherTotal
Additions to non-current assets
31 March 2025
6,887 513 -7,400
Additions to non-current assets
30 September 2024
18,702 2,175 -20,877
Total assets 31 March 2025545,122 62,447 (11,151)596,418
Total assets 30 September 2024589,793 56,580 (11,225)635,148
Total liabilities 31 March 2025223,212 30,449 (669)252,992
Total liabilities 30 September 2024250,337 25,478 (823)274,992
Additions to non-current assets include additions to property, plant and equipment, right-of-use assets and
intangible assets.
9
Tower Limited
2Insurance and reinsurance contracts
This section provides information on Tower's underwriting activities.
2.1Insurance and reinsurance contracts
$ thousandsAssetsLiabilities
Current
portion
Non-
current
portion
Total
-40,84740,847 -40,847
-122,57096,736 25,834 122,570
-163,417137,583 25,834 163,417
41,161 -38,0393,122 41,161
$ thousandsAssetsLiabilities
Current
portion
Non-
current
portion
Total
-42,04242,042 -42,042
-135,527110,169 25,358 135,527
-177,569152,211 25,358 177,569
35,503 -28,8546,649 35,503
In the six months to 31 March 2025, Tower experienced an increase in the number and average cost of
new over-cap claims received from the Natural Hazards Commission relating to the Canterbury
earthquakes of 2010/2011. This has driven a re-evaluation of the assumptions underpinning the
provision for those Canterbury earthquake claims. As a consequence, the insurance service result in
the consolidated statement of comprehensive income includes a net $8.7m expense (31 March 2024:
$1m expense) relating to strengthening of the provision for Canterbury earthquakes claims. The
liability for incurred claims includes a $24.8m liability (30 September 2024: $20.4m liability), and the
total reinsurance assets held includes a $0.9m asset (30 September 2024: $3.6m asset) for Canterbury
earthquakes claims. Due to the nature of the Canterbury earthquakes it is difficult to predict the
number or cost of future over-cap claims, however the liability for incurred claims represents Tower’s
best estimate of the present value of future expenditure on Canterbury earthquake claims, including a
risk adjustment at a 90% confidence interval.
Tower collects premiums from customers in exchange for providing insurance coverage. These
premiums are recognised as insurance revenue when they are earned by Tower, with an insurance
contract liability recognised on the consolidated balance sheet for unearned amounts.
When customers suffer a loss that is covered by their policy, Tower will make payments to customers
or suppliers, which it recognises as insurance expenses. To ensure that Tower’s obligations to
customers are properly recorded within the financial statements, Tower recognises a liability for
incurred claims on the consolidated balance sheet.
Liability for remaining coverage
Total reinsurance contracts held
Total insurance contracts issued
Total reinsurance contracts held
As at 31 March 2025
As at 30 September 2024
Liability for remaining coverage
Liability for incurred claims
Total insurance contracts issued
Liability for incurred claims
To manage Tower’s risk and optimise its returns, Tower reinsures some of its exposure with
reinsurance companies. Net expense from reinsurance contracts is measured as an allocation of
reinsurance premiums paid plus any other directly attributable expenses, less amounts recovered from
reinsurers and any change in risk from reinsurer non-performance.
10
Tower Limited
2.2Reconciliation of insurance assets and liabilities
As at 31 March 2025
$ thousands
Excluding loss
component
Loss
component
Estimates of
the present
value of
future cash
flows
Risk
adjustment
Opening insurance contract liabilities41,658 384 122,348 13,179 177,569
Insurance revenue(295,820) - - - (295,820)
Insurance service expense:
Incurred claims and other insurance service expenses* - - 154,389 3,273 157,662
Amortisation of insurance acquisition cash flows35,153 - - - 35,153
Changes relating to past service - - (9,943)(1,734)(11,677)
Losses on onerous contracts-92 - - 92
Finance expense from insurance contracts issued - - 1,430 -1,430
Effect of movements in exchange rates290 12 713 -1,015
Amounts included in comprehensive income(260,377)104 146,589 1,539 (112,145)
Cash flows:
Premiums received294,835 - - - 294,835
Claims and other insurance service expenses paid- - (161,085)-(161,085)
Insurance acquisition cash flows(36,540) - - - (36,540)
Amounts included in statement of cash flow258,295 -(161,085)-97,210
Pre-recognition cash flows derecognised and other changes783 - - - 783
Insurance contract liabilities at 31 March 202540,359 488 107,852 14,718 163,417
Total
Liabilities for remaining
coverage
Liabilities for incurred
claims
Certain cash flows presented above may be on a deemed basis in respect of movements through the insurance
contract liabilities, and certain amounts may be recognised in other receivable, payable and provision balances, so they
may differ from the actual cash flow amounts reported in the consolidated statement of cash flows.
* Excludes $12.8m of insurance service expenses for depreciation and amortisation, which do not form part of
insurance contract liabilities on the balance sheet.
11
Tower Limited
2.2Reconciliation of insurance assets and liabilities (continued)
As at 30 September 2024
$ thousands
Excluding loss
component
Loss
component
Estimates of
the present
value of
future cash
flows
Risk
adjustment
Opening insurance contract liabilities43,994 620 223,565 17,630 285,809
Insurance revenue(555,818) - - - (555,818)
Insurance service expense:
Incurred claims and other insurance service expenses* - - 314,130 3,666 317,796
Amortisation of insurance acquisition cash flows62,835 - - - 62,835
Changes relating to past service - - (15,950)(8,117)(24,067)
Reversals on onerous contracts-(223) - - (223)
Finance expense from insurance contracts issued - - 5,592 -5,592
Effect of movements in exchange rates(272)(13)(348)-(633)
Amounts included in comprehensive income(493,255)(236)303,424(4,451)(194,518)
Cash flows:
Premiums received559,383 - - - 559,383
Claims and other insurance service expenses paid- - (404,641)-(404,641)
Insurance acquisition cash flows(68,119) - - - (68,119)
Amounts included in statement of cash flow491,264 -(404,641)-86,623
Pre-recognition cash flows derecognised and other changes(345)- - -(345)
Insurance contract liabilities at 30 September 202441,658 384 122,348 13,179 177,569
Liabilities for remaining
coverage
Liabilities for incurred claims
Total
Certain cash flows presented above may be on a deemed basis in respect of movements through the insurance contract
liabilities, and certain amounts may be recognised in other receivable, payable and provision balances, so they may
differ from the actual cash flow amounts reported in the consolidated statement of cash flows.
* Excludes $25m of insurance service expenses for depreciation and amortisation, which do not form part of insurance
contract liabilities on the balance sheet.
12
Tower Limited
2.3Reconciliation of reinsurance assets and liabilities
$ thousands
Excluding loss
recovery
component
Loss
recovery
component
Estimates of
the present
value of future
cash flows
Risk
adjustment
Half year ended 31 March 2025
(11,690)-44,5472,646 35,503
(37,561) - - - (37,561)
- - 7,085 41 7,126
- - (8,669)(1,824)(10,493)
- - 392 -392
160 -187-347
(37,401)-(1,005)(1,783)(40,189)
67,464 - - - 67,464
- - (21,617)-(21,617)
67,464 -(21,617)-45,847
18,373 -21,925863 41,161
Year ended 30 September 2024
(4,229)-146,3275,138 147,236
(79,587) - - - (79,587)
- - 6,527 642 7,169
- - (15,812)(3,134)(18,946)
- - 3,020 -3,020
101 -25-126
(79,486)-(6,240)(2,492)(88,218)
72,025 - - - 72,025
- - (95,540)-(95,540)
72,025 -(95,540)-(23,515)
(11,690)-44,5472,646 35,503
Effect of movements in exchange rates
Amounts included in comprehensive income
Cash flows:
Premiums paid net of ceding commissions
Reinsurance recoveries (net of profit share commissions)
Amounts included in statement of cash flow
Reinsurance contract assets at 30 September 2024
Reinsurance premiums
Amounts recoverable from reinsurers:
Amounts recoverable for incurred claims
Changes relating to past service
Finance income from reinsurance contracts held
Assets for remaining
coverage
Asset for incurred claims
Total
Opening reinsurance contract assets
Reinsurance premiums
Amounts recoverable from reinsurers:
Amounts recoverable for incurred claims
Changes relating to past service
Effect of movements in exchange rates
Certain cash flows presented above may be on a deemed basis in respect of movements through the reinsurance
contract assets, and certain amounts may be recognised in other receivable, and payable balances, so they may differ
from the actual cash flow amounts reported in the consolidated statement of cash flows.
Finance income from reinsurance contracts held
Amounts included in comprehensive income
Premiums paid net of ceding commissions
Reinsurance recoveries (net of profit share commissions)
Amounts included in statement of cash flow
Cash flows:
Reinsurance contract assets at 31 March 2025
Opening reinsurance contract assets
13
Tower Limited
3Investments
3.1Investment income
$ thousands31-Mar-2531-Mar-24
Interest income9,224 8,032
Net realised gain1,452 1,011
Net unrealised (loss)/gain(547)989
Investment income10,129 10,032
3.2Investments
Level 1
Level 2
Level 3
$ thousandsLevel 1Level 2Level 3Total
As at 31 March 2025
Fixed interest investments-351,495-351,495
Property investment - 34 - 34
Investments-351,529-351,529
As at 30 September 2024
Fixed interest investments-367,472-367,472
Property investment - 34 - 34
Investments-367,506-367,506
Tower invests funds collected as premiums and provided by shareholders to ensure it can meet its obligations to
pay claims and expenses and to generate a return to support its profitability. Tower has a low appetite for
investment related risks and therefore the majority of its investments are in investment grade supranational and
government bonds, and term deposits.
There have been no transfers between levels of the fair value hierarchy during the current period (2024: nil).
Tower designates its investments at fair value through profit or loss in accordance with its Treasury policy. It
categorises its investments into three levels based on the inputs available to measure fair value:
Fair value is calculated using quoted prices in active markets. Tower currently does not
have any Level 1 investments.
Investment valuations are based on direct or indirect observable data other than
quoted prices included in Level 1. Level 2 inputs include: (1) quoted prices for similar
assets or liabilities; (2) quoted prices for assets or liabilities that are not traded in an
active market; or (3) other observable market data that can be used for valuation
purposes. Tower investments included in this category include government and
corporate debt, where the market is considered to be lacking sufficient depth to be
considered active, and part ownership of a property that is rented out to staff.
Investment valuation is based on unobservable market data. Tower currently does not
have any Level 3 investments.
14
Tower Limited
4Risk Management
4.1Capital management risk
Regulatory solvency capital
$ thousands
ParentGroupParentGroup
313,558 329,682 323,834 339,139
190,670 190,831 152,474 148,547
122,888 138,851 171,360 190,592
164%173%212%228%
Tower is exposed to multiple risks as it works to set things right for its customers and their communities whilst
maximising returns for its shareholders. Everyone across the organisation is responsible for ensuring that Tower's risks
are managed and controlled on a day-to-day basis.
As at 31 March 2025
Tower has calculated the above solvency positions in accordance with the RBNZ interim Solvency Standard (ISS) in
force at the time of the relevant reporting date. For 31 March 2025 the solvency position has been calculated using
the second amendment to the ISS which became effective from 1 March 2025. For 30 September 2024 the previously
published version of the ISS was used. The effect of implementing the second amendment of ISS was to reduce the
Adjusted Solvency Margin.
As at 30 September 2024
Tower Limited's Group and Parent solvency margin are illustrated in the table below.
Solvency capital
Adjusted prescribed capital requirement
Adjusted solvency margin
Adjusted solvency ratio
15
Tower Limited
5Capital Structure
5.1Contributed equity
$ thousands31-Mar-2530-Sept-24
Opening balance460,734 460,315
Capital return (including costs of the capital return)(45,493) -
Share rights issued under Tower Long-Term Incentive Plan1,449 419
Total contributed equity416,690 460,734
Represented by:
Opening balance (number of shares)379,483,987 379,483,987
Issue of new shares under Tower Long-Term Incentive Plan1,128,138 -
Cancellation of shares on capital return(38,060,062) -
Total shares on issue342,552,063 379,483,987
5.2
Earnings per share
31-Mar-2531-Mar-24
49,740 32,416
-3,620
49,740 36,036
377,266,075 379,483,987
4,357,428 2,032,682
381,623,503 381,516,669
Basic earnings per share (cents) for continuing operations13.2 8.5
Diluted earnings per share (cents) for continuing operations13.0 8.5
Basic earnings per share (cents)13.2 9.5
Diluted earnings per share (cents)13.0 9.4
5.3
Dividends
Weighted average number of ordinary shares for basic earnings per share
Total profit attributable to shareholders ($ thousands)
On 20 March 2025 the Group implemented its capital return which resulted in 38.1m shares being cancelled. Total
payments in relation to the capital return included $45.1m paid to shareholders, plus transaction costs. As part of the
capital return $0.1m was paid to related parties, being key management personnel, on the same basis as other
shareholders of Tower Limited.
On 30 January 2025, Tower paid a final dividend of 6.5 cents per share in respect of the 2024 financial year, totalling
$24.7m. On 20 May 2025, the Board approved an interim dividend of 8.0 cents per share, with the dividend being
payable on 26 June 2025 for approximately $27.4m.
Weighted average number of dilutive potential ordinary shares issued under the Tower
Long-Term Incentive Plan
Weighted average number of ordinary shares for diluted earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average
number of fully paid shares.
Diluted earnings per share includes shares that would be issued if unvested share rights were exercised. The weighted
average number of shares is adjusted by the number of outstanding rights to executive shares that are assessed to be
vested at their future vesting dates.
Ordinary shares issued by the Company are classified as equity and are recognised at fair value less direct issue costs. All
shares rank equally with one vote attached to each share. There is no par value for each share.
This section provides information about how Tower finances its operations through equity. Tower's capital position
provides financial security to its customers, employees and other stakeholders whilst operating within the capital
requirements set by regulators.
Profit from continuing operations attributable to shareholders ($ thousands)
Profit from discontinued operations attributable to shareholders ($ thousands)
1,128,138 Ordinary shares were issued during the period to the Group’s former CEO as part of the company's Long
Term Incentive Plan. This constituted a modification to the plan as per note 7.2.
16
Tower Limited
6
Other balance sheet items
6.1Intangible assets
As at 31 March 2025
$ thousandsGoodwill
Software and
work in progress
Customer
relationships
Total
Composition:
Cost17,744 117,125 40,674 175,543
Accumulated amortisation-(54,620)(24,900)(79,520)
Intangible assets17,744 62,505 15,774 96,023
Reconciliation:
Opening balance17,744 60,855 18,022 96,621
Amortisation-(7,498)(2,248)(9,746)
Additions*-9,532-9,532
Disposals-(292)-(292)
Transfers to property, plant and equipment - (92)-(92)
Closing Balance17,744 62,505 15,774 96,023
As at 30 September 2024
Composition:
Cost17,744 107,977 40,674 166,395
Accumulated amortisation-(47,122)(22,652)(69,774)
Intangible assets17,744 60,855 18,022 96,621
Reconciliation:
Opening balance17,744 57,326 23,454 98,524
Amortisation-(13,837)(5,432)(19,269)
Additions*-18,392-18,392
Disposals - (47)-(47)
Transfers to property, plant and equipment-(979)-(979)
Closing Balance17,74460,85518,02296,621
* During the year ended 30 September 2024, additions to software assets primarily related to continued investment in
Tower’s core insurance platform and website, and digitisation of claims processes.
This section provides information about assets and liabilities not included elsewhere.
*During the half year ended 31 March 2025, additions to software assets primarily related to continued investment in
Tower’s core insurance platform and website, and digitisation of claims processes.
17
Tower Limited
6.2Provisions
Composition
$ thousands31-Mar-2530-Sept-24
Annual leave and other employee benefits5,968 12,771
Compliance and remediation10,735 9,188
Provisions16,703 21,959
A compliance and remediation provision has been recognised and is reassessed at each reporting period. A range of
possible outcomes is considered, and the re-assessment has resulted in an additional $2.9m being recognised in the
current period, which has been offset by payments made during the period. The resulting provision allows for amounts
to be repaid to customers and costs associated with any potential regulatory action.
The Financial Markets Authority (FMA) is seeking a declaration from the court that Tower contravened the Financial
Markets Conduct Act (2013) and that a pecuniary penalty is paid to the Crown. Any eventual penalty to be determined
by the High Court may be in excess or lower than the provision recognised in these financial statements. The timing of
any penalty payable by Tower is also uncertain.
18
Tower Limited
7
7.1
$ thousands31-Mar-2530-Sept-2431-Mar-24
35,913 51,931 47,007
27,019 23,459 32,407
Cash and cash equivalents
62,932 75,390 79,414
7.2Tower Long Term Incentive Plan
These modifications were:
(i)
(ii)
(iii)
7.3Contingent liabilities
Claims and disputes
7.4Capital commitments
7.5
Subsequent events
The Group is occasionally subject to claims and disputes as a commercial outcome of conducting insurance business.
Provisions are recorded for these claims or disputes when it is probable that an outflow of resources will be required to
settle any obligations. Best estimates are included within claims reserves for any litigation that has arisen in the usual
course of business.
The Group has no other contingent liabilities.
As at 31 March 2025, Tower has nil capital commitments (2024: nil).
On 20 May 2025, the Board approved an interim dividend of 8.0 cents per share, with the dividend being payable on
26 June 2025 for approximately $27.4m. There were no other subsequent events.
The Group has a long-term incentive plan which is intended to align the interests of management and shareholders. During
the period, following the resignation of the former CEO, the Board used their discretion under the plan rules allowing
unvested awards to vest on a pro-rata basis subject to several modifications.
The modification to restrict the sale of shares on the NZX occurred on 13 February 2025. As it did not confer any benefit to
the former CEO, no further consideration is required under NZ IFRS 2 Share-Based Payments.
The other modifications have been determined to have occurred on 8 November 2024. The assessed fair value of the rights
was calculated directly before and after the modifications.
These valuations were completed using a Monte Carlo share price simulation with input from an external valuation
specialist. The valuations determined that the modifications did not create any incremental fair value.
In accordance with NZ IFRS 2 Share-Based Payments, the remaining costs of the original awards were accelerated with an
expense recognised of $0.3m for the period (2024: Nil).
The total share-based payments accounting expense for the Group for the period was $0.7m (2024: $0.4m).
That the awards would vest pro-rata on 31 January 2025;
That the awards remain subject to the condition of meeting total shareholder return performance hurdles retained
from the original restricted share rights grant, however that TSR was to be evaluated as at 31 January 2025; and
A restriction on selling shares on the NZX for a period of six months, except to fund any tax obligation.
Other information
This section includes additional required disclosures.
Notes to the consolidated statement of cash flows
Composition
Tower operates in countries in the Pacific Islands that are subject to foreign exchange restrictions, which may restrict
the ability for immediate use of cash by the parent or other subsidiaries. As at 31 March 2025, this included NZD 1.3m
held in Papua New Guinea (30 September 2024: NZD 7.4m) and NZD 3.9m held in the Solomon Islands (30 September
2024: NZD 3.3m) following the sales of the Tower's business in Papua New Guinea and the Solomon Islands. This cash
is not currently available for use outside of these countries.
*The average interest rate at 31 March 2025 for deposits at call is 3.36% (31 March 2024: 4.67%).
Cash at bank
Deposits at call*
19
Independent auditor’s review report
To the shareholders of Tower Limited
Report on the consolidated interim financial statements
Our conclusion
We have reviewed the consolidated interim financial statements of Tower Limited (the Company) and
its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 March 2025, and
the consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the six month period ended on that date, and notes,
comprising material accounting policy information and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying consolidated interim financial statements of the Group do not present fairly, in all
material respects, the financial position of the Group as at 31 March 2025, and its financial
performance and cash flows for the six month period then ended, in accordance with International
Accounting Standard 34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to
International Accounting Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibilities are further described in the Auditor’s responsibilities for
the review of the consolidated interim financial statements section of our report.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
In our capacity as auditor and assurance practitioner, our firm provides audit and other assurance
services. In addition, certain partners and employees of our firm may deal with the Group on normal
terms within the ordinary course of trading activities of the business. The firm has no other relationship
with, or interests in, the Group.
Responsibilities of the Directors for the consolidated interim financial statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair
presentation of these consolidated interim financial statements in accordance with IAS 34 and NZ IAS
34 and for such internal control as the Directors determine is necessary to enable the preparation and
fair presentation of the consolidated interim financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the consolidated interim financial statements
Our responsibility is to express a conclusion on the consolidated interim financial statements based on
our review. NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our
attention that causes us to believe that the consolidated interim financial statements, taken as a whole,
are not prepared in all material respects, in accordance with IAS 34 and NZ IAS 34.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, www.pwc.co.nz
A review of consolidated interim financial statements in accordance with NZ SRE 2410 (Revised) is a
limited assurance engagement. We perform procedures, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other
review procedures. The procedures performed in a review are substantially less than those performed
in an audit conducted in accordance with International Standards on Auditing and International
Standards on Auditing (New Zealand) and consequently does not enable us to obtain assurance that
we might identify in an audit. Accordingly, we do not express an audit opinion on these consolidated
interim financial statements.
Who we report to
This report is made solely to the Company’s shareholders as a body. Our review work has been
undertaken so that we might state those matters which we are required to state to them in our review
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the shareholders as a body, for our review procedures, for this
report or for the conclusion we have formed.
The engagement partner on the review resulting in this independent auditor’s review report is Lisa
Crooke.
For and on behalf of:
PricewaterhouseCoopers Auckland
20 May 2025
PwC 21
---
Tower
2025 Half
Year Results
1 October 2024 to 31
March 2025
20 May 2025
2
Chairman’s update
Michael Stiassny, Chairman
Business update
Paul Johnston, Interim Chief Executive Officer
HY25 financial performance
Angus Shelton, Interim Chief Financial Officer
Looking forward
Paul Johnston, Interim Chief Executive Officer
Agenda
3
Chairman’s update
Delivering shareholder value
•Sustainable profit growth leading to consistent shareholder returns
•Capital return of $45m delivered
•Fully imputed HY dividend of 8 cents per share
Tower is well positioned
•Tower is a more focused, efficient and profitable business
•Growing the right risks through risk-based pricing and enhanced underwritingcapability
•Strategic investments delivering enhanced efficiency, strengthening the business
•Strong capital and solvency, reinforced by RBNZ stress test report
Tower is delivering strong performance driven by focus on profitable growth and operational delivery
4
Business update
Paul Johnston,
Interim Chief Executive Officer
5
HY25 results summary
•Strong underlying profit
•Reported profit impacted by customer remediation & Canterbury
Earthquake provisions
•Pleasing house premium growth with improved risk selection
•Lower motor premium growth due to rate reductions to address
affordability and competition
•Claims ratio reduced and below historical levels
•MER reduced while increasing strategic investment
•$3m large events incurred of $50m full year allowance
•Fully imputed HY25 interim dividend declared: 8 cents per share
1
Note 1: Based on Tower’s ordinary dividend policy to pay a sustainable annual dividend in the range of between
60-80% of adjusted earnings where prudent to do so
6
8 cents per share
vs 3 cents in HY24
Dividend
Interim dividend declared
38%
vs 50% in HY24
Our performance
Positive operational and business performance
BAU claims ratio
(Business as usual)
MER
(Management expense ratio)
30.4%
vs 31.3% in HY24
Large event costs
$3m
vs -$1.9m in HY24
Reported profit
$49.7m
vs $36.0m in HY24
Note 1: Excluding divested portfolios. Prior year customer numbers have been adjusted to exclude sold and held for sale portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New
Zealand commercial rural portfolio
Note 2: Large event costs were negative in HY24 due to due to the absence of large events in the financial year and a favourable revision to prior year large events costs
Note 3: Definition of underlying profit and a reconciliation to reported profit is included in the appendices
GWP growth
(Gross written premium)
4% | $297m
vs $291m in HY24
$61.7m
vs $36.6m in HY24
Underlying profit
312,000
vs 309,000 at HY24
Customers
1
1
2
3
7
Improved risk selection delivers profitable growth
4%
1
premium growthreflects lower risks & competitive pricing
•House GWP growth 11%; 10% rate, 90% volume
•Motor GWP growth -4%; policy growth offset by rate
reductions to balance margin and growth
•NZ retention at 78%(HY24: 77%)
2
•Partnerships business over $100m GWP (12-month rolling)
New policy growth significantly improves risk exposure
•91% of new policies sold in HY25 rated ‘Low’ or ‘Very Low’
flood risk (HY24: 86%)
•Tower's expected average annual loss from flood reduced
24% on a per policy basis and 18% overall
G R O S S W R I T T E N P R E M I U M R O L L I N G 1 2 M O N T H S
Note 1: Excluding divested portfolios. Prior year customer numbers have been adjusted to exclude sold and held for sale portfolios which include the Solomon Islands business and Vanuatu subsidiary, and
the New Zealand commercial rural portfolio
Note 2: Commercial rural policies have not been included because this business has been sold and policies are actively being transferred out of the portfolio
Note 3: Other products include Marine, Travel, Pet, Liability, and Workers Compensation
3
M O V E M E N T I N T O T A L N Z R I S K C O U N T ( 0 0 0 ’ s )
8
Digital strategy drives better customer experience
N E T P R O M O T E R S C O R E
•ContinuedMy Tower improvements; 94% of car policy
changes are now available digitally
•New self-service functionality built and delivered in HY25
alone has reduced assisted task volumes by around 9k
•ActiveMy Tower users increased 10% to 171k
•Sales & service contact centre abandonment rate at 7%
(HY24: 7%), claims 11%
•Fair conduct programme implemented
Net promoter score improved to +41
9
Reducing MER through scale and efficiency
MANAGEMENT EXPENSE RATIO
1
•Scale and targeted premium growth reducing MER
•Digital efficiency: New Zealand digital tasks
2
– 60% sales,
47% service; 66% claims lodgement
•Operational efficiency: Suva hub handling 73% of NZ
sales and service calls (HY24: 50%)
•Increase in strategic investment to further reduce
MERvia streamlined processes
Note 1:Calculated as management expenses and net commission expense divided by net insurance revenue
Note 2: Sales tasks are all New Zealand new business policies sold online (previously reported as Tower Direct only). Service tasks are either digital (actioned by the customer
through the My Tower portal online) or assisted (through Tower’s call centre). In prior years, multiple tasks completed on the same call were reported as one assisted transaction
- these are now reported individually. Digital claims tasks refer to claim lodgement only.
Management expense ratio (MER) improved to 30.4%; increased strategic investment
10
Strategic investments to enhance business performance
•Targeting 80% of all NZ sales, service, and claim lodgement
tasks to be digital by end FY27
•New motor and house assessing systems reducing
assessment time and repair costs
•New contact centre platform planned to deliver frontline
efficiencies
•Enhancing risk-based pricing – landslide and sea surge to be
applied to renewal book and included in purchase journey
•New customer data platform to provide end-to-end
customer data management
•Investment in capability & leadership
Future state
11
BAU claims ratio below historical levels
•Prior period targeted rating has earned through to the loss ratio
•Prolonged period of favourable weather
•Improved risk selection including prior period off-risking of high
theft motor vehicles
•Claims transformation programme delivering benefits:
•>85% of house and motor claims are either straight to
repairer or assessed internally (+4%) reducing claim costs
•Tower repair network utilisation improved to 70% (HY24:
47%) reducing claim costs and repair times
BAU CLAIMS RATIO
1
Note 1:BAU claims are defined as those not part of a large event (large events are defined as having a cost to Tower of $2m or more, with lodged claims from two or more policyholders). BAU
claims ratio is calculated as BAU claims expense divided by net insurance revenue
Business-as-usual claims ratio reduced to 38.1%
12
Consistent improvement in underlying performance
•Underlying business improving half-on-half
•Increase in premium from targeted policy growth and
targeted rate increases earning through
•Reduction in BAU claims ratio from calmer weather
and improved risk selection
U N D E R L Y I N G N P A T
1
Underlying NPAT excluding large events was $64m in HY25
Note 1: Definition of underlying profit and a reconciliation to reported profit is included in the appendices
Financial
performance
Angus Shelton,
Interim Chief Financial Officer
14
Group underlying financial performance
•Gross written premium growth of 4%
1
•BAU claims ratio reduced to 38.1% due to targeted rate
increases, risk selection and benign weather
•One large event in HY25 with cost of $3m
•Management expense ratio improved to 30.4% as a result of
business growth and efficiencies
•Underlying NPAT
2
including large events of $61.7m
•Reported profit of $49.7m impacted by Canterbury
Earthquakes strengthening and costs of customer
remediations
Note 1: Adjusted to exclude sold/held for sale portfolios: Solomon Islands, Vanuatu, and NZ commercial rural
Note 2: Definition of underlying profit and a reconciliation to reported profit is included in the appendices
1
15
•Underlying NPAT
1
of $61.7m vs $36.6m in HY24
•Business growth includes higher net earned premium less
theassociated growth in claims and management
expenses
•BAU claims ratio improved from rating and underwriting
actions, calmer weather, and lower motor frequency
•One large event in HY25 of $3m before tax versus a
release of $1.9m before tax in HY24
•Strategic investments are being made to improve growth
and efficiency
Movement in underlying NPAT
Note 1: A definition of underlying profit and a reconciliation to reported profit is included in the appendix
16
Lower frequency and severity of claims
N Z M O T O R S E V E R I T Y
1
& F R E Q U E N C Y
2
•Prior period high theft motor off-risking has lowered frequency and
severity of motor claims
•Reduction of external assessing usage has lowered motor severity
•Improved house selection and risk-based pricing is reducing
frequency of house claims
•Lower number of BAU weather-related claims
•One large event
in HY25 – the Dunedin flooding event in October
2024 with an estimated cost of $3m
•One large event has occurred since 31 March and is not included in
HY25 results - Cyclone Tam flooding event in April 2025 with an
estimated cost of $4m
Note 1: Severity is defined as the cost of claims (excluding large events, large house, windscreen) divided by the count of claims
Note 2: Frequency is defined as the number of claims (same exclusions as above) divided by risks in force
The historical severity and frequency numbers are current estimates as at 31 March 2025 reflecting development of prior year claims in their respective incurred periods
N Z H O U S E S E V E R I T Y & F R E Q U E N C Y
17
Continued improvement in management expense ratio
M O V E M E N T I N M A N A G E M E N T E X P E N S E
R A T I O ( M E R )
•MER reduced 0.9% to 30.4%
•Scale efficiencies from business growth
contributes 3% reduction in MER
•Strategic investments are being made to
improve growth and efficiency
•Timing differences related torecognition of
deferred acquisition costs
•Staff and other costs increasing, but at a lower
rate than inflation due to continued benefits
from digitisation and Suva hub
18
Conservative investment strategy
Note 1: Core investment portfolio refers to Tower’s fixed income investment portfolio in NZ. It excludes cash held for operational purposes in NZ and cash and short-term deposits held by Tower’s
Pacific subsidiaries. Subsidiaries of banking groups with a credit rating have been grouped under their parent bank’s credit rating, even if unrated themselves
•Net investment income $10m in HY25; in line with HY24
•Running yield on the core investment portfolio is 3.9% as
at 31 March 2025
•Conservative investment strategy with low duration
(target of 0.5 years)
•Interest rates are now past their peak with yields
expected to continue decreasing through FY25
I N V E S T M E N T A S S E T P R O F I L EC O R E I N V E S T M E N T P O R T F O L I O
1
Y I E L D
19
Canterbury earthquakes & customer remediation
O P E N C E Q C L A I M S
Canterbury earthquakes (CEQ)
•HY25 charge of $6.2m after tax, treated as a non-
underlying item
•18 properties open as at 31 March 2025
•15 new over cap or reopened claims from NHC in the
half (+10 vs HY24), with an average cost higher than
historical levels, drove an increase in valuation
assumption for future claims
Customer remediation
•HY25 charge of $4.9m after tax, treated as a non-
underlying item
•Includes further provision for repayments due to
customers, plus costs of the remediation programme
•Tower has provided for costs associated with
regulatory action, however the action taken by the
FMA is still in progress
20
Reinsurance programme
•Catastrophe reinsurance of up to $800m for two events,
up from $750m in FY24
•Additional prepaid third event catastrophe cover up to
$85m with $20m retention
•Increase in retention for catastrophe events mitigated by 3-
year rolling contracts, and expected to also benefit future
years
•Reinsurance programme also includes:
•Proportional reinsurance cover for large single
property risks
•General accident and marine cover
$800m
$85m
1st Cat loss
(retention $16.9m)
2nd Cat loss
(retention $16.9m)
1st Cat event
2nd Cat event
3rd Cat event
3rd Cat loss
(retention $20m)
Reinsurance
coverage of
$781.2m
Reinsurance
coverage of
$781.2m
Reinsurance
coverage of
$65m
1st Cat Loss
(retention $18.8m)
2nd Cat Loss
(retention $18.8m)
3rd Cat Loss
(retention $20m)
21
Capital and solvency position
Note 1: SR = Solvency ratio – the ratio of solvency capital to adjusted prescribed capital
Note 2: Based on Tower’s ordinary dividend policy to pay a sustainable annual dividend in the range of between 60-80% of adjusted earnings where prudent to do so
T O W E R S O L V E N C Y
N Z P A R E N T ( $ m )
•Solvency ratio
1
of 164% (212% as at 30 Sep 24)
•Tower’s regulatory solvency position is
calculated under the second amendment to
the Interim Solvency Standard (ISS), effective
1 March 2025, which reduced Tower’s
solvency margin
•Adjusted solvency margin is $122.9m, a
decrease of $48.5m from $171.4m as at 30
September 2024
•Adjusted solvency margin at 31 March 2025 is
stated net of interim dividend of 8 cents per
share
2
•A- financial strength rating reaffirmed in April
2025 by AM Best
212%
173%
164%
Looking forward
Paul Johnston,
Interim Chief Executive Officer
Second half priorities
•Targeted growth focused on lower risk properties and
growing newly established partnerships
•Customer experience improvements
•Risk-based pricing - landslips and sea surge
•End-to-end customer data management
•Efficiency, digitisation, and process improvements
through delivering strategic investments
•Customer remediations; fixing root causes and
strengthening processes
23
24
FY25 guidance and future targets
HY25
Actual
FY25
Guidance
FY27
Target
GWP growth
(excluding operations sold)
4%Mid-single digit10% - 15%
Large events cost/allowance$3m$50m
Management expense ratio30.4%< 31%< 28%
Combined operating ratio69.7%82% - 84%< 86%
Underlying NPAT
(assuming full utilisation of large events allowance)
$61.7m$70m - $80m
Return on equity
1
14%13% - 17%> 18%
Note 1: Return on equity is defined as reported net profit after tax divided by average book equity
This FY25 guidance assumes full utilisation of the large events allowance which is conservatively set at $50m. Any unused portion of the
large events allowance (after tax) at year end will increase underlying NPAT to improve the full year result.
Questions?
Appendices
27
P A R T N E R S H I P S G W P ( $ m )
P A C I F I C G W P ( $ m )
Business unit distribution
•Underlying growth of 2%
1
•House new risks sold +43% vs HY24
•Underlying growth of 13%
•Total in force risks increased 9% to
119,000
•Underlying growth of 6%
1
•Solomon Islands & Vanuatu
businesses sold in FY24; PNG in FY23
PARTNERSHIPS
TOWER DIRECT
PACIFIC
1
T O W E R D I R E C T G W P ( $ m )
T O W E R D I R E C T G W P ($m)
ROLLING 12 MONTHS
P A R T N E R S H I P S G W P ( $ m )
R O L L I N G 1 2 M O N T H S
P A C I F I C G W P ($m)
ROLLING 12 MONTHS
Note 1: Excluding divested portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New Zealand commercial rural portfolio
28
Reconciliation between underlying profit after tax and reported profit after tax
Underlying and reported profit/(loss):
•“Net insurance revenue”, “net insurance service
expense” and “underlying profit” do not have a
standardised meaning under Generally Accepted
Accounting Practice (GAAP). Consequently, they
may not be comparable to similar measures
presented by other reporting entities and are not
subject to audit or independent review.
•Tower uses underlying profit as an internal reporting
measure as management believes it provides a
better measure of Tower’s underlying performance
than reported profit/(loss), as it excludes large or
non-recurring items that may obscure trends in
Tower’s underlying performance, and is useful to
investors as it makes it easier to compare Tower’s
financial performance between periods.
•Tower has applied a consistent approach to
measuring which items are excluded from
underlying profit in the current and comparative
periods.
•“Reported profit/(loss) after tax” is calculated and
presented in accordance with GAAP
(1)Non-underlying items include net impact of customer remediation provision increase and related costs, Canterbury earthquake valuation update, regulatory and compliance projects such as Financial
Markets (Conduct of Institutions) Amendment Act)
(2)Reclassification of claims handling expenses from management expenses to claims expense; and FX gains/losses from other income to management expenses
(3)Reclassification of reinsurance expenses to present as net income from reinsurance contracts held for statutory purposes
(4)Reclassification of reinsurance and other recoveries to present as net income from reinsurance contracts held for statutory purposes
29
Disclaimer
This presentation has been prepared by Tower Limited to provide shareholders with information on Tower’s business. This document is part of, and should be read in
conjunction with an oral briefing to be given by Tower. A copy of this webcast of the briefing is available at http://www.tower.co.nz/investor-centre/ It contains
summary information about Tower as at 31 March 2025 which is general in nature, and does not purport to contain all information a prospective investor should
consider when evaluating an investment. It is not an offer or invitation to buy Tower shares. Investors must rely on their own enquiries and seek appropriate
professional advice in relation to the information and statements in relation to the proposed prospects, business and operations of Tower. The data contained in this
document is for illustrative purposes only. Past performance is not a guarantee of future performance and must not be relied on as such. The information in this
presentation does not constitute financial advice.
Forward looking statements
This document contains certain forward-looking statements. Such statements
relate to events and depend on circumstances that will occur in the future and
are subject to risks, uncertainties and assumptions. There are a number of
factors which could cause actual results and developments to differ materially
from those expressed or implied by such forward-looking statements, including,
among others: the enactment of legislation or regulation that may impose costs
or restrict activities; the re-negotiation of contracts; fluctuations in demand and
pricing in the industry; fluctuations in exchange controls; changes in government
policy and taxation; industrial disputes; and war and terrorism. These forward-
looking statements speak only as at the date of this document.
Disclaimer
Neither Tower nor any of its advisers or any of their respective affiliates,
related bodies corporate, directors, officers, partners, employees and agents
(other persons) makes any representation or warranty as to the currency,
accuracy, reliability or completeness of information in this presentation. To
the maximum extent permitted by law, Tower and the other persons
expressly disclaim any liability incurred as a result of the information in this
presentation being inaccurate or incomplete in any way. The statements
made in this presentation are made only as at the date of this presentation.
The accuracy of the information in this presentation remains subject to
change without notice.
---
1
Tower HY25 Results Announcement Investor Presentation Script
Slide 1 – 2025 Half Year Results
Michael Stiassny
Mōrena, good morning and thank you for making the time to join us for this
investor call and presentation of our 2025 half year results.
Slide 2 - Agenda
With me in Auckland is our Interim Chief Executive Officer, Paul Johnston, and
Interim Chief Financial Officer, Angus Shelton, who will take you through the
results and answer your questions.
Slide 3 – Chairman’s update
Tower’s half year 2025 results demonstrate a business in good heart and
performing strongly. A razor-sharp focus on profitable growth and operational
excellence is creating value for our shareholders and will continue to do so.
Earlier this year, we delivered a capital return of $45 million that was value
accretive, while today we are declaring a fully imputed half-year dividend of 8
cents per share, reflecting our strong financial performance and commitment
to rewarding our shareholders.
There is no question that Tower is a more focused, efficient and profitable
business. We are increasingly growing the right risks through risk-based pricing
and enhanced underwriting capability, while we also make the strategic
investments necessary to improve efficiency and further strengthen the
business.
And, our capital and solvency position remains strong.
Indeed, the findings from the recent RBNZ stress test reinforce this view,
indicating that Tower, along with other New Zealand private insurers, is
prepared and capable of meeting all policyholder claims and obligations in the
event of a catastrophe much larger than any previously experienced.
However, the stress test findings are not positive for the Government, as it will
bear a disproportionate share of the costs in future catastrophes. I believe this
2
burden underscores the critical importance of New Zealand having a well-
functioning private insurance market. It’s essential that this market is
attractive to global reinsurers, which means we must manage New Zealand’s
hazard risks effectively.
[pause]
With all this in mind, I did not think that almost 15 years later we would still be
making provisions for the Canterbury earthquakes. You will see we have
charged $6.2m after tax in the half year and received a further 15 new or
reopened claims.
Not only is the never-ending tail of Canterbury earthquake claims imposing
huge costs on the Government and insurers, customers are getting a raw deal.
[pause]
Tower has a positive relationship with the National Hazards Commission,
formerly the EQC. The current operating model whereby private insurers
manage the claim end-to-end is working well for customers. Claims relating to
the Kaikoura earthquake and the 2023 catastrophe events were settled quickly
and with relatively few complaints.
But the Canterbury earthquakes remain an albatross, as the EQC Act did not
set a time limit for reopening historic claims, and claims continue to be
reopened. There is no knowing how long a claim will take to be managed by
NHC which is responsible for paying the first $100,000 of each Canterbury
earthquakes claim, before it becomes a private insurers’ responsibility.
To put it in perspective, as it stands, a Canterbury earthquake claim transferred
from the NHC today could still have years to run before the final costs are
known.
More importantly, the current situation may also prevent NHC from restoring
capital levels, leaving it more vulnerable to the next big event. From a
customer perspective, this is an intergenerational equity issue where today’s
policyholders are continuing to pay for Canterbury earthquake claim costs.
3
In our view, the government must legislate to impose final time limits. This is
critical, to provide certainty for all parties and to bring about closure to an
event that happened nearly 15 years ago.
It’s also about putting a stop to the peripheral industry that has created a self-
perpetuating gravy train. For example, lawyers and advocates prolonging
disputes, while contractors actively seek to find damage in the hope of pinning
it to the earthquake and getting more work. This practice is egregious. The
Government - and ultimately the taxpayer – bears a substantial financial
burden and these additional costs put unnecessary pressure on premiums to
the detriment of customers.
As a society, this will require us to have some difficult conversations. No one –
least of all me – wishes further harm to those who were affected by these
tragic earthquakes and continue to discover damage or are faced with shoddy
repairs. It won’t be easy, but as a nation, we need to find a way to balance the
ongoing needs of those with historical claims with the needs of future
claimants.
[pause]
As the RBNZ report highlighted, the Government, via NHC is already paying a
high proportion of New Zealand’s natural hazard costs, which it can ill-afford.
Therefore, Tower is actively encouraging the Government to reconsider
Treasury’s proposed increase to the NHC cap to avoid the Government taking
on even more of New Zealand’s natural hazard risk and other unintended
consequences.
Because the levy is applied uniformly, an increased NHC cap would lead to
higher insurance costs for everyone, but those who will suffer the most are
lower income homeowners.
We also urge caution against implementing a proposed 50% increase in the
NHC levy. Taxes and levies already make up a significant portion of customer
premiums and for Tower could rise to 56% of an average premium under the
current proposals.
In short, the net result of the proposed NHC levy increase would significantly
undermine Tower’s efforts to implement fair, risk-based pricing by sending the
4
wrong price signals. It would be a direct slap in the face for homeowners who
live in less hazard-prone areas.
For the avoidance of doubt, Tower believes in – and will continue to advocate
loudly for – risk-based pricing.
[pause]
Global reinsurers expect insurers to manage and price for risks appropriately.
We must avoid the situation we have witnessed in California and Florida where
insurers have withdrawn, and the state governments have been left with a
huge fiscal risk.
We firmly believe the Government’s role should be to prioritise risk reduction
in hazard-prone communities rather than taking on more financial risk. By
doing so, it will help keep insurance affordable for New Zealanders.
[pause]
I’ll now hand over to Paul and Angus who will take you through the results and
outlook before we take questions.
Paul Johnston
Slide 4 – Business update
Kia ora, and good morning, everyone.
Thank you for joining us for our 2025 half year results .
Slide 5 – HY25 results summary
Here is a summary of our half year results, which demonstrate Tower ’s strong
performance.
I will talk through these points in more detail shortly, but first, an overview of
our performance this year .
5
Slide 6 – Our performance - positive operational and business performance
Gross written premium for the half year to 31 March 2025 increased to $ 297
million, up 4% on HY2 4, excluding divested portfolios.
Customer numbers increased to 312,000 compared with 309 ,000 in HY24. This
growth was predominantly driven by growth in the New Zealand home and
contents insurance portfolio.
The BAU claims ratio has improved substantially to 38% due to a range of
factors including the prolonged period of favourable weather, easing inflation,
enhanced risk selection and more efficient claims processes.
The management expense ratio has improved year-on-year, reducing to 30.4%
due to GWP growth and operational efficiencies, partially offset by increased
investment in digital and process initiatives this year .
Large events costs at the half year were $3m due to the Dunedin flooding
event in October 2024. The April 2025 Cyclone Tam flooding event in New
Zealand will be recorded as a large event in the second half with an estimated
cost of $4m.
Reflecting our positive operational and business performance we are reporting
an underlying profit after tax of $61. 7m, up from $36.6 m in HY24 .
Reported HY25 profit is $49.7m compared to $36m in HY24.
On the basis of these results Tower will pay an interim dividend of 8 cents per
share . This dividend will be fully imputed.
Slide 7 – Improved risk selection delivers profitable growth
6
Premium growth continued at a slower rate in the year to 31 March, increasing
by 4 %. This is because of a reduc tion in average premiums due to attracting a
higher proportion of lower-risk house insurance and motor policies, which
attract lower pricing, along with more competitive pricing in the New Zealand
market.
Our strategy has been to focus on grow ing high-quality risks in the home
insurance market - we know that home insurance customers have more
policies , and stay longer than solely motor insurance customers. So, we are
pleased to see our premium growth was predominantly driven by customer
growth with in the New Zealand home and contents insurance portfolio. Ninety
per cent of our house insurance GWP growth came from volume.
As you can see in the bottom graph, grow th in motor risks has slowed
following actions to tighten our risk appetite in the prior year. We will continue
to target high quality risks by offer ing more favourable pricing to lower risk
vehicles and apply ing higher premiums to those that our data shows will
potentially incur higher claims costs.
Pleasingly our Partnerships business passed a milestone this half year of
$100m in GWP from active partners, on a 12-month rolling basis.
In line with our risk-based pricing strategy, growth from new policies sold in
HY25 has significantly improved our risk exposure. At the end of HY25 91% of
house policies were rate d by Tower as low or very low for flood risk, a 5%
improvement from HY24 .
This has contributed to our expected average annual loss from flooding
reducing by 24% on a per policy basis, and by 18% for the portfolio overall.
7
Slide 8 – Digital strategy drives better customer experience
Our focus on customer experience combined with our use of digital technology
and data has contributed to continued improvements in our overall net
promoter score, which was plus 41 at HY25 , up from plus 31 in HY24.
Customer experience improvements have been seen across both our digital
and our contact centre agent assisted customer journeys. Customers can now
complete 94% of policy changes for their car insurance online. This includes
features such as the ability to change the policy excess, update the sum
insured and renew or cancel the policy, all without needing to make a phone
call.
The number of active My Tower users continue s to increase , rising by 10% to
171,000, demonstrating that our online journeys resonate with customers.
We’re continuing to see the benefits of our core platform and our 300-strong
Suva hub team, which have contribut ed to further reducin g our sales and
service and claims contact centre abandonment rates, now down to 7% and
11% respectively.
We have implemented our fair conduct programme, in response to the
Conduct of Financial Institutions amendment to the Financial Markets Conduct
Act. The programme sets out policies and processes to further advance fair
customer outcomes, while delivering on our promise of simple and rewarding
customer experiences.
This week, Canstar announced Tower as the winner of its Home and Contents
Insurer of the Year Award, for the second year running. The independent
8
research panel again noted the outstanding value offered by Tower’s insurance
products.
Slide 9 – Reducing MER through scale and efficiency
We are pleased to have achieved a further reduction in MER to 3 0.4% in HY25 .
This includes increased investments for strategic initiatives which I’ll cover in
the next slide.
Our Suva hub is continuing to deliver efficiency benefits. In HY25 our Suva
team handled 73% of all New Zealand sales and service calls to Tower; an
increas e from 50% in HY24.
Slide 10 - Strategic investments to enhance business performance
In HY25 we leveraged the low claims cost environment and accelerated
strategic investments to enhance our business performance.
Continuing our digitisation strategy, we are targeting to have 80% of all New
Zealand sales, service, and claim lodgement tasks completed digitally by the
end of FY27.
We're also rolling out a new motor assessing system to cut down assessment
times and reduce repair costs, and we plan to implement a new house
assessing system in 2025.
A new contact centre platform to improve frontline efficiency and customer
service , will be implemented this year.
9
And, as we have previously signalled, we are e xpand ing our risk-based pricing
programme to include two additional hazards - landslide and sea surge risks –
which will be applied to both existing policy renewal s and new policies.
Importantly, as we do with earthquake and inland flooding risks, we will be
sharing information transparently with customers to help people understand
the landslip and sea surge risks their homes face, and how this impacts their
insurance pricing.
We are also investing in our customer data capabilities to enable better end-
to-end data management, helping us serve our customers more accurately and
effectively.
Lastly, we're investing in our team's capabilities and leadership to ensure our
people are well set up for the future and continue delivering great customer
experiences.
Slide 11 – BAU claims ratio below historical levels
In HY25 our BAU claims ratio significantly improved from 5 0% in HY24 to 38% ,
thanks to a combination of a prolonged period of favourable weather, easing
inflation, fewer total loss house claims, improved claims processes and
enhanced risk selection.
Prior period rating increases implemented to offset inflation and increased
reinsurance costs are also continuing to earn through to the loss ratio.
As I noted earlier, our improved risk selection across our motor portfolio has
helped reduc e claims from higher risk policies.
10
Tower ’s investment in our Claims Transformation programme aimed at
improv ing processes and implementing new technology to deliver faster and
more efficient claims management, is delivering benefits. In the half we
increas ed the proportion of claims assess ments performed in-house by 4%,
and significantly improved use of our preferred repair network to 70%, up from
47% in the first half of 2024.
These improvements are helping to reduce claims costs and shorten repair
times.
Slide 12 – Consistent improvement in underlying performance
Underlying NPAT excluding large events was $ 64m in HY25.
As y ou can see from this chart, we are steadily improving our underlying
business performance and improving half-on-half .
These positive first half results reflect Tower’s commitment to delivering
sustainable, profitable growth by upholding core insurance fundamentals:
robust risk selection and pricing and claims management.
We are focused on continuing to grow high quality risks while enhancing our
resilience and claims performance.
Slide 13 - Financial performance title slide – Angus Shelton
I will now hand you over to our interim Chief Financial Officer , Angus Shelton
who will talk you through the details of our financial performance this year .
Slide 14 – Group underlying financial performance
Thank you, Paul .
11
Looking at the consolidated results, we can see that GWP has increas ed by
$6.4m, or 4 % - excluding divested portfolios - compared to HY24. This growth
was driven by customer growth in the New Zealand home and contents
insurance portfolio which grew GWP by 11% year-on-year .
The continued benign weather, alongside rating and underwriting actions have
significantly improved the BAU claims ratio to 38.1%.
Tower’s large events costs at the half year were $3m due to the Dunedin
flooding event in October 2024.
The MER improve d to 3 0.4%.
We are reporting an underlying NPAT including large events of $61.7m up from
$36.6m , and reported profit after tax of $49.7m, up from $36m in
HY24. Reported profit includes provision for additional costs of customer
remediation-related costs and an increase in Canterbury earthquake cost
estimates, due to an increase in the number of new or reopened claims
received from the NHC.
Slide 15 – Movement in underlying NPAT
Here is the bridge between underlying NPAT in HY24 of $36.6 m and underlying
NPAT of $61.7m in HY25 .
You can see that business growth, driven by higher net earned premium,
alongside significant improvements to BAU claims performance, have largely
driven this result .
Partly offsetting those items were a $3.6m change in large events costs (versus
the release of $1. 9m before tax in provisions in HY24) and an additional $2.8m,
12
after tax, of strategic investments aimed at growth, efficiency and
strengthening the business, which Paul covered earlier.
Slide 16 – Lower frequency and severity of claims
The significant reduction in our BAU claims ratio to 38.1% was driven by lower
frequency and severity (or cost) of claims.
As shown in the top graph , both the frequency and severity of motor claims
has reduc ed year-on-year - this is partly due to our actions to reduce our
exposure to high-theft motor policies in the past year to 18-months.
The l ower inflation ary environment, coupled with efficiency initiatives in our
claims processes - such as reducing our reliance on external assessors - has
lowered the average severity of motor claims by $32 to $3,179 per claim .
Additionally, the frequency of motor claims has reduced to 12.1% of policies
experiencing a claim in the year.
Our efforts to attract lower-risk properties, plus continued mild weather in the
period, have contributed to a reduction in house claim frequency over the past
two years , from 6.9% in HY24 to 6.5% of policies experiencing a claim in HY25 .
The severity of house insurance claims has also reduced in line with inflation
and our improved risk exposure.
We experienced one large event in the half – the Dunedin flooding event in
October 2024, with an estimated cost of around $3m. The Cyclone Tam
flooding event that occurred over Easter will be recorded as a large event in
the second half with an estimated cost of $4m and is therefore not included in
HY25 results.
13
Slide 17 – Continued improvement in management expense ratio
We are pleased to see our management expense ratio continue to reduce with
a 0.9% improvement over the year to 3 0.4%.
Our i ncreased scale from business growth enabled a 3% reduction in MER.
We are leveraging the low claims cost environment to accelerate strategic
investments aimed at improving growth, efficiency and strengthening the
business, which accounted for a 1.5% increase in the half .
Net commission and deferred acqui sition costs led to a 0.3% increase.
Staff and other costs increased by 0.2%, noting that these costs are increasing
below the rate of inflation due to cost efficienc ies from digitisation and the
Suva hub.
Slide 18 – Conservative investment strategy
In HY25 net investment income was $10m before tax, which was in line with
the same period last year.
Tower maintains a conservative investment policy with a focus on high credit
quality and liquidity, and a target duration for the core investment portfolio of
six months.
Our strategy has mitigated the impact on our profit from macroeconomic
factors and mark-to-market movements. This allowed us to benefit from
higher interest rates through FY24, however the r unning yield on the core
investment portfolio has since continued to decrease across HY25, finishing the
half year at 3.9%.
14
Interest rates are now well past their peak , and we expect yields to continue
decreasing through FY25.
Slide 19 – Canterbury earthquake & customer remediation
The two primary non-underlying items included in the reported profit were an
increase in Canterbury earthquake cost estimates, due to Tower continuing to
receive more new overcap or reopened claims than expected from the NHC,
and costs associated with customer remediations.
We are continuing to settl e Canterbury claims, with 13 closed over the half-
year. However, we also received an additional 15 new overcap or reopened
claims from NHC in the half, bringing the total number of open claims to 18 on
31 March . As a result, there was a net increase of 2 open claims from
September 2024.
As these 15 claims reflect a higher rate than we have seen in recent times, we
have increased our outstanding claims provision to allow for the possibility of a
greater number of new or re-opened claims in the future than we had
previously expected. As a result, HY25 has seen an adverse Canterbury
earthquake P&L charge of $6.2m after tax , recorded in non-underlying items.
We continue to closely manage outstanding claims, with our specialist team
working to finalise them as efficiently as possible.
We are also working closely with the NHC to look further back into their
pipeline, to identify earlier when claims may exceed the $100K cap and be
passed on to us. Claims can exceed the cap due to building cost inflation
increas ing the ultimate cost of the claim or missed damage.
15
In HY25, we incurred a charge of $4.9 million after tax, as a non-underlying
item, related to customer remediations. This charge includes further provisions
for repayments to customers, as well as the costs associated with our
remediation programme.
Tower has previously provided for costs related to regulatory action taken by
the FMA concerning the incorrect application of multi-policy discounts, which
is ongoing.
Slide 20 – Reinsurance programme
Tower’s reinsurance strategy provides protection from volatility caused by
large events and maintains financial flexibility to support growth, while
underpinning strong solvency.
As we highlighted in September Tower’s reinsurance programme provides
comprehensive cover for our home, motor, boat and commercial portfolios
across our New Zealand and Pacific markets.
Slide 21 - Capital and solvency position
Tower's capital and solvency position remain strong .
Our parent solvency ratio has decreased to 164%, from 212% in FY24, due to
the capital return and changes in the way we are required to calculate
solvency .
Tower’s regulatory solvency position is calculated under the second
amendment to the Reserve Bank of New Zealand ’s Interim Solvency Standard,
which applied from 1
st
March 2025.
16
As we have previously forewarned, the second amendment has resulted in
some significant changes to the solvency calculation and, largely as a result of
these changes, the prescribed capital requirement has increased to
$190.9m.This movement, combined with the return of $45m excess capital to
shareholders in March and allowance for an 8 cents per share interim dividend
which will be paid in June, offset by profits earned in the half, means that the
adjusted solvency margin has fallen to $122.9m, a decrease of $48.5m from
$171.4m .
We were pleased that Tower’s A- credit rating was reaffirmed in April by the
international rating agency AM Best .
Slide 22 – Looking forward
Thank you. I will now hand back to Paul who will provide an update on our
guidance and priorities for the second half.
Paul Johnston
Thank you, Angus .
Slide 22 – Second half priorities
Here are our priorities for FY25 which are centred on strengthening the
business through core insurance fundamentals, includin g robust risk selection
and pricing, and improved claims management. Investing in our business will
also remain a key focus.
We will continue to increas e new business from home insurance policy sales by
targeting high quality risks. At the same time, we are committed to growing
our motor book as our pricing becomes more attractive for lower risk vehicles.
17
Additionally, we plan to expand through existing and new partnerships,
including Kiwibank, homes.co.nz and HealthCare Plus, who joined us in FY24.
Invest ing in simple and rewarding customer experiences remains a priority.
This includes applying landslide and sea surge risk ratings to policy renewals
and adding these perils to our automated customer-facing quote-to-buy tool ,
where customers can already see their home’s risk ratings for earthquake and
flood hazards .
This year , we are investing in our customer data capabilities to enable better
end-to-end customer data management. This will further enhance our
customer experience, increase efficiency and reduce risk by being a single
source of the truth.
Importantly, we will continue to pursue efficiency, digitisation, and process
improvements that deliver benefits to our customers and drive value for our
shareholders.
As we examine and improve our systems and processes, we are committed to
addressing the root causes and applying lessons from the errors that led to
customer remediations.
Our second half priorities aim to continually enhance our customer experience,
positioning us to deliver sustainable premium growth and attractive long-term
shareholder returns.
Slide 23 – FY25 guidance and future targets
In FY2 5 Tower expects GWP growth - excluding revenue from sales of
subsidiary operations - to be mid-single digit.
18
We have set a prudent large events allowance of $50m and anticipate further
improvements to our management expense ratio which we expect will be less
than 31% .
We are targeting a combined operating ratio of between 82% and 84%.
Assuming full utilisation of the $50m large events allowance, Tower anticipates
underlying NPAT to be between $70m and $80m. Any unused portion of the
large events allowance (after tax) at year end will increase underlying NPAT to
improve the full year result.
Additionally, we are targeting a return on equity of between 13% and 17%.
You can see we have also disclosed a range of medium-term targets for FY27.
We are expecting to build back up to our targeted GWP growth of 10%-15% in
FY27 as the insurance cycle stabilises and strategic initiatives are delivered.
However, due to the carried forward impact of lower growth in FY25, we
expect our MER to now be between 26% and 28% in FY27.
Thank you for your time this morning, I will now hand back to the operator to
ask for questions.
---
Distribution Notice
Classification: Sensitive
[Draft Note: all cash amounts in this form should be provided to 8 decimal places]
Section 1: Issuer information
Name of issuer Tower Limited
Financial product name/description Ordinary Shares
NZX ticker code TWR
ISIN (If unknown, check on NZX
website)
NZTWRE0011S2
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 12/06/2025
Ex-Date (one business day before the
Record Date)
11/06/2025
Payment date (and allotment date for
DRP)
26/06/2025
Total monies associated with the
distribution
1
$27,404,165
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.11111111
Gross taxable amount
3
$0.11111111
Total cash distribution
4
$0.08000000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.01411765
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Yes
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
Classification: Sensitive
If fully or partially imputed, please
state imputation rate as % applied
6
28%
Imputation tax credits per financial
product
$0.03111111
Resident Withholding Tax per
financial product
$0.00555556
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
Start date and end date for
determining market price for DRP
Date strike price to be announced (if
not available at this time)
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Paul Johnston
Contact person for this
announcement
Emily Davies
Contact phone number +64 21 815 149
Contact email address emily.davies@tower.co.nz
Date of release through MAP
20/05/2025
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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