Photo: RNZ / Dan Cook
Tower Insurance has downgraded its full-year earnings guidance, citing pressure from inflation, vehicle crime and increased weather-related claims.
The company said its full-year underlying result is forecast to be between a loss of $2 million and a profit of $3m, compared to its previous forecast range of a profit of $8m and $13m.
It said inflation, motor crime and supply chain issues have worsened over the third quarter, with the average cost of motor claims rising by 20 percent year-on-year, to about $3400.
Despite increasing car insurance premiums by an average of 26 percent in the past year, Tower said its claims ratio - excluding major disasters - had worsened over the quarter.
"Persistent wet weather and other factors are also resulting in motor and house claims frequency above historical norms," the company told the sharemarket.
Following the Auckland floods and revisions to estimates for cyclones Judy and Kevin in Vanuatu, Tower's large events costs stood at $39.5m, leaving $10.5m of its $50m allowance for large events for the remainder of the year ending 30 September.
"Tower has now settled more than 50 percent of the claims received from January's Auckland and upper North Island weather event and Cyclone Gabrielle," it said.
"The insurer has implemented a dedicated event response function and scaled up its Fiji-based resourcing to ensure remaining large event claims are resolved efficiently."
It said at the end of the third quarter, gross written premiums were up 16.5 percent on the prior year, excluding Tower Papua New Guinea, to $385m.
The company maintained its guidance for gross written premium growth to be between 15 and 20 percent.