NZ-based insurer, Tower has reported a loss after tax of $NZ11.6 million for the six months to March 31, compared to a loss of $8.2 million for the six months ended 31 March 2017.
Tower’s said its first half result was impacted by the settlement of the Peak Re reinsurance dispute and severe and unprecedented weather across the South Pacific.
Investors took the news in their stride and the shares ended unchanged on 74 cents on the ASX (Tower is a dual listed company on the NZX and the ASX). Tower said underlying profit after tax was $NZ7.3 million for the half, just under the $NZ8.1 million from a year earlier.
Once again no dividend will be paid to shareholders, but a return to payouts is planned for the full year, according to the company. Payouts were suspended in 2016 because of the size of the claims from the Canterbury quakes and then a takeover battle and bids (from Suncorp in particular)that eventually went nowhere. For the six months ended 31 March 2018 Tower Limited reported a 5% increase in revenue as a result of policy and premium growth.
The company said yesterday the improvements and positive results in the underlying business show Tower’s transformation is well underway.”
Tower’s loss of $11.6 million included $NZ16.2 million adverse impact from the Peak Re settlement and a further $NZ2.3 million after-tax impact due to movements in continuing provisions for claims relating to theCanterbury earthquakes in 2010 and 2011.
The unprecedented level of storm activity resulted in a $NZ5 million after-tax impact to Tower’s underlying profit after tax, saw the small drop in net profit to $7.3 million.
Despite this, Tower said its focus on improving the underlying business enabled it to deliver an underlying result where Gross Written Premium increased to $NZ161 million, a $NZ15.2 million improvement compared to the first half of 2017, management and sales expenses were maintained at $NZ52.1 million and total claims costs were contained at $NZ74.4 million, despite the storm events experienced in the half.
Tower Chief Executive Richard Harding is pleased with Tower’s underlying performance and the continued transformation of the business.
“We are making it easier for customers to purchase insurance from us and the continued improvement of our online offering has generated a significant increase in sales above industry averages. While making it easier for our customers, we’re also simplifying our business which is delivering improved operating performance,” he said.
Mr Harding said that while the reported result is disappointing, finalising the Peak Re dispute marked a significant step forward in finalising the legacy of the Canterbury earthquakes.
“The strong growth and positive trends we’ve seen this half have been offset by the resolution of the Peak Re dispute and a number of severe and unprecedented weather events.
“With investment being made in a new IT platform, our focus is now on accelerating the positive momentum we’ve generated and leveraging the powerful platform we are building for further growth,” Mr Harding said.
