Tower's transformation agenda driving strong growth

Tuesday, 29 May 2018, 1:30 pm
Press Release: Tower Insurance

Tower's transformation agenda driving strong growth

Source: Tower Insurance

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Tower Limited (NZX/ASX:TWR) has today announced that strong growth in Gross Written Premium, policy numbers and digital sales are evidence that its transformation is well underway.

While significant improvements in key metrics have been achieved, severe and unprecedented weather along with the settlement of the Peak Re dispute has resulted in Tower reporting a half year loss of $11.6 million for the half year ended 31 March 2018.

Features of HY 2018:

Transformation driving strong growth and providing confidence in strategy:

- Gross written premium in core book increased 15.6% over HY17

- Growth of 9,634 policies in core book this half

- Claims discipline maintained, despite exceptional weather events with claims costs contained at $74.4m, increasing $9.7m compared to HY17

- Management expense ratio decreased to 38.9% compared to 40.8% HY17, while still investing in the business

Underlying profit after tax of $7.3 million impacted by severe and unprecedented weather events across New Zealand and the Pacific

Reported half year loss of $11.6 million impacted by

- $16.2 million after-tax impact from Peak Re settlement

- $5 million after-tax impact from the weather events in the first half

- Slight adjustment to Canterbury provisions, resulting in a $2.3 million after-tax impact

Continued positive progress closing Canterbury earthquake claims, with a 46% reduction in open claims in the 12 months since 31 March 2017

Transformation well underway and decision made to accelerate momentum

Tower’s half year result shows that the business is strong and that its efforts to transform into a digital challenger brand are driving improved performance.

A focus on customers has delivered continued growth in the core New Zealand portfolio, with Tower’s simple and easy products and its fairer approach to pricing proving attractive to customers, driving strong growth and increasing underwriting profit.

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.

Tower's full half year results information pack can be found here: https://www.nzx.com/companies/TWR/announcements

ENDS

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