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Highlights
- Tower raises FY25 profit guidance amid strategic recalibration
- Premium growth revised due to pricing strategy and risk profile shift
- Expense outlook adjusts with ongoing investments and weather impacts
Tower Limited (ASX:TWR), a prominent New Zealand-based general insurer, has released an upgraded earnings outlook for the financial year 2025, pointing to improved profitability despite recalibrated growth expectations and ongoing weather-related pressures.
Revised Profit Outlook
The insurer has revised its forecast for underlying net profit after tax (NPAT) to a range of $70 million to $80 million, up from the previously projected $60 million to $70 million. This optimistic adjustment reflects confidence in its operational performance and assumes full usage of its $50 million large events allowance for the fiscal year.
The improved earnings outlook is underpinned by robust core operations, even as Tower navigates a shifting insurance landscape influenced by pricing competition and evolving risk profiles across its policy base.
Premiums and Efficiency Investments
Tower has also adjusted its gross written premiums (GWP) guidance, now expecting growth in the mid-single digits—down from its earlier estimate of 7% to 12%. This recalibration stems from a strategic focus on acquiring and retaining lower-risk customers, resulting in reduced average premiums. Competitive pricing in key segments has also contributed to the moderated growth forecast.
On the expense front, the management expense ratio (MER) is now expected to remain below 31%, compared to the previous guidance of under 29%. The slight increase reflects targeted investments in digital transformation, customer experience enhancements, and long-term efficiency gains. These efforts are aimed at modernising operations and improving the scalability of its business model.
Claims Environment and One-Off Costs
Tower continues to contend with the impacts of recent adverse weather events. The company recorded one major event in FY25 to date—the Dunedin floods in October—estimated to cost approximately $3 million. In addition, Tower is managing nearly 250 claims related to other recent storm activity, which may qualify as another large event if costs exceed the $2 million threshold.
Furthermore, reported profit will include the effect of non-underlying items such as customer remediation initiatives and revised provisions related to historic Canterbury earthquake claims. These adjustments are part of the company’s ongoing efforts to address legacy issues and improve customer outcomes.
