Tower (TWR) H1 2025 earnings summary

Executive summary

• Achieved strong operational and financial performance in HY25, focusing on profitable growth, efficiency, and operational excellence, resulting in value creation for shareholders.

• Underlying profit after tax rose to NZD 61.7 million from NZD 36.6 million in HY24; reported profit after tax was NZD 49.7 million.

• Declared a fully imputed interim dividend of NZD 0.08 per share and completed a NZD 45 million capital return.

• Business growth driven by New Zealand home and contents insurance, improved risk selection, and digital transformation.

• Maintained a strong capital and solvency position, confirmed by RBNZ stress tests, despite regulatory changes and capital return.

Financial highlights

• Gross written premium (GWP) for HY25 increased to NZD 297 million, up 4% year-over-year, with customer numbers rising to 312,000.

• Underlying profit after tax rose to NZD 61.7 million; reported profit after tax was NZD 49.7 million.

• Management expense ratio improved to 30.4%, and BAU claims ratio improved to 38.1% from 50% in HY24, reflecting favorable weather and operational efficiencies.

• Large event costs were NZD 3 million (Dunedin flooding), with an additional NZD 4 million (Cyclone Tam) expected in the second half.

• Net investment income was NZD 10 million before tax, in line with the prior year, with a running yield of 3.9%.

Outlook and guidance

• FY25 GWP growth expected to be mid-single digit, with a prudent large events allowance of NZD 50 million.

• Management expense ratio targeted below 31% for FY25, with a target of below 28% by FY27.

• Combined operating ratio forecast at 82%-84% for FY25, targeting below 86% by FY27.

• Underlying NPAT for FY25 guided at NZD 70–80 million, assuming full utilization of the NZD 50 million large events allowance.

• Medium-term GWP growth target of 10%-15% by FY27 as the insurance cycle stabilizes, with ongoing focus on risk-based pricing, efficiency, digitization, and customer experience improvements.