Tower (TWR) H2 2025 earnings summary

Executive summary

• Record underlying profit after tax of NZD 107.2 million and reported profit of NZD 83.7 million for FY 2025, reflecting strong operational performance and favorable weather conditions.

• Total dividends for the year reached NZD 24.5 per share, including a fully imputed final dividend of NZD 16.5 per share and a NZD 45 million capital return to shareholders.

• Strategic focus on risk-based pricing, digital transformation, and customer experience, with significant investments in technology and AI.

• Customer numbers grew to 318,000, with 6% policy growth in core New Zealand products and 11% growth in house policies.

• Recognized for innovation and customer service, including industry awards and a rising net promoter score.

Financial highlights

• Gross written premium (GWP) increased 2% year-over-year to NZD 600 million, driven by policy volume growth but offset by lower average premiums.

• Underlying profit rose to NZD 107.2 million from NZD 83.5 million in FY 2024; reported profit increased to NZD 83.7 million from NZD 74.3 million.

• BAU claims ratio improved to 41.3%, down from 48.1% in FY 2024, due to improved risk selection and benign weather.

• Management expense ratio remained stable at 31.4%, with efficiency gains offset by increased investment in technology and growth initiatives.

• Large event costs were NZD 7.2 million, significantly below the 10-year average.

Outlook and guidance

• FY 2026 underlying net profit after tax guidance is NZD 87–97 million, excluding large events, with GWP growth targeted at 5–10%.

• Management expense ratio expected to remain between 31% and 32% in FY 2026, improving to 28–30% by FY 2028.

• Combined operating ratio targeted at 86–88% for FY 2026, improving to 85–87% by FY 2028.

• Large event allowance set at NZD 45 million for FY 2026, down from NZD 50 million.

• Medium-term GWP target of NZD 750 million by FY 2028, representing a CAGR of over 7.5%.