How Tower’s Record FY25 Profit and New Risk Pricing Signal Next Growth Phase

Tower’s Record FY25 Performance

Tower Limited has delivered a standout financial performance for the year ended 30 September 2025, reporting an underlying net profit after tax (NPAT) of NZD 107.2 million, up from NZD 83.5 million in FY24. The reported profit also rose to NZD 83.7 million, reflecting adjustments for increased Canterbury earthquake claims, customer remediation costs, and a software impairment provision.

This record result was underpinned by a combination of factors including a low incidence of large weather events, a significantly improved business-as-usual (BAU) claims ratio that fell to 41% from 48%, and steady management expense ratios despite ongoing investments in technology and growth initiatives.

Growth and Strategic Initiatives

Gross written premium (GWP) increased modestly by 2% to NZD 600 million, supported by a 4% rise in customer numbers to 318,000. Tower’s strategic focus on its home insurance portfolio paid dividends, with house policies growing 11%, while motor insurance premiums declined due to competitive pricing pressures.

Key to Tower’s growth strategy is its expanded risk-based pricing model, which now includes sea surge and landslide risks alongside existing earthquake and flood risk assessments. This granular approach to pricing has improved portfolio resilience and customer transparency, with over 90% of customers benefiting from reduced natural hazard premiums averaging NZD 70 per policy.

Further supporting growth, Tower announced a new partnership with Westpac New Zealand, effective July 2026, to underwrite and supply general insurance products to Westpac’s retail customers. This collaboration complements existing partnerships with Kiwibank and Trade Me, strengthening Tower’s distribution channels and market presence.

Digital Transformation and Operational Efficiency

Tower’s investments in digital transformation and artificial intelligence have enhanced operational efficiency and customer experience. The launch of an AI-enabled contact centre platform, built on Amazon Connect, has streamlined customer interactions, reducing frontline effort and improving service consistency. Digital self-service adoption continues to rise, with 63% of sales and 51% of service tasks completed online in New Zealand.

These technology initiatives are part of Tower’s broader claims transformation programme, which has automated significant portions of claims lodgement and processing, enabling staff to focus on complex claims and improving overall efficiency.

Capital Position and Dividend Policy

Tower maintains a strong capital and solvency position, with a solvency ratio of 143% and an A- financial strength rating reaffirmed by AM Best in April 2025. The Board declared a fully imputed final dividend of 16.5 cents per share, bringing total dividends for FY25 to 24.5 cents per share, reflecting the company’s commitment to returning value to shareholders while maintaining prudent capital management.

Climate Strategy and Sustainability

In line with its commitment to sustainability, Tower exceeded its FY25 greenhouse gas emissions reduction target, achieving a 24% reduction in Scope 1 and 2 emissions against its FY20 baseline. The company has integrated climate-related risks and opportunities into its business planning and risk management frameworks, expanding its risk-based pricing to new natural hazard risks and advocating for improved climate adaptation planning at local and national levels.

Tower’s climate strategy is supported by strong governance, with oversight from the Board and dedicated management committees. The insurer continues to invest in data, technology, and product innovation to support a low-emissions, climate-resilient future.

Outlook for FY26

Looking ahead, Tower expects underlying NPAT for FY26 to be in the range of NZD 55 million to NZD 65 million, assuming full utilisation of a NZD 45 million large events allowance. GWP is forecast to grow between 5% and 10%, supported by ongoing customer growth and strategic partnerships. The management expense ratio is expected to remain stable between 31% and 32%, reflecting continued investment in growth and technology.

While Tower anticipates some normalization of claims experience and rating conditions that benefited FY24 and FY25, the company’s strong foundations and strategic initiatives position it well for sustainable growth and enhanced customer service in the coming years.