Tower Delivers Solid First-half Performance

Friday, 29 May 2020, 9:00 am
Press Release: Tower Insurance

Kiwi insurer, Tower Limited (NZX / ASX: TWR), has today announced a half year profit of $14.9 million after tax, a $3 million improvement on the same period last year.

- Solid growth and first-half performance

Continued growth through digital channels and a stabilised claims ratio demonstrate the successful implementation of the company’s strategy.

Tower Chief Executive, Richard Harding, says that this is the result of transforming the business and offering something better to customers.

"Our strategy has focussed us clearly on becoming a digital challenger brand, taking on the big incumbents and challenging outdated industry norms.

It’s great to see people are noticing that we’re a better option and choosing to become Tower customers. In March almost 60% of our new business came in through our digital channels.

"People want to do more digitally and we are well placed to help. We have had great take up of our new self-service portal and over 40% of claims were lodged online in March.

"The growth we are achieving through digital channels and the number of customers now choosing to interact with us online shows that digital is the way of the future and that we are on the right path," said Harding.

- Action taken to address expenses

Harding said that as well as delivering growth and solidifying Tower’s digital challenger position, the new technology simplifies and automates many functions which enables productivity gains.

"Our strategy saw us growing our business from our existing cost base, making minor additional adjustments where needed.

"However, the current recessionary environment means that growth will now be lower than we had planned for, and to offset that, we need to reduce costs.

"We are currently working through a process to deliver cost savings of 7.2m per year, which includes a proposal for 108 redundancies, along with other cost-out initiatives.

"As part of our ongoing shift to become a digital company with a more flexible workplace, we are also proposing to create 30 new flexible and part-time roles that enable us to respond more effectively to the new, digital ways that customers interact with us.

"At Tower we are a close-knit team and any processes or decisions that affect our people are never made lightly. We will be supporting our team through any changes that are made with the right support.

- Updated Guidance

Tower has updated its FY20 guidance of underlying NPAT to $25m - $28m, taking into account the Timaru hailstorm, Tropical Cyclone Harold, subdued growth and lower expenses.

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