A rising number of expensive house claims and severe weather events have resulted in a "difficult" financial year for the insurance company Tower.
Tower downgraded its earnings forecast three times over the course of the year. Photo: RNZ / Dan Cook
Key numbers for the six months ended September vs year ago:
- Net profit: $19.3 vs $11.2m (includes large one-off settlement with EQC)
- Revenue: $428.2m vs $410.8
- Underlying profit: $20.8m vs $28.4m
- Final dividend: 5cps vs nil
The company's bottom line shot up as last year's result was hit by a one-off settlement with the Earthquake Commission.
Tower's underlying profit came in at the top end of the guidance it provided to the market in September, of between $19m and $21m, but was well down on last year's result.
Its chief executive Blair Turnbull said the full year result reflected the challenges it's faced from an increasing number of severe floods and higher building costs.
"Tower has navigated a difficult year. Our focus has been on addressing a range of external challenges, while supporting our customers and delivering on our technology and distribution growth strategies."
The company downgraded its earnings forecast three times over the course of the year, as the cost of large events rose to $13.9m from $9.7m a year ago.
These included severe floods in Napier, the West Coast and the Auckland suburb of Kumeu, which caused serious damage to customers' homes.
The company had announced a new risk-based pricing model for flood risks, which would result in 10 percent of customers seeing an increase in the flood portion of their premiums.
The cost of large house claims, which were mainly driven by house fires, rose by nearly two thirds over the year to 92, at a cost of $21.1m.
Tower was another company feeling the pinch caused by inflationary pressures, as claim costs rose by $17.1m to $166.8m due to the higher cost of building supplies.
The company reported a 4 percent gain to its top line, as customer numbers and gross written premiums increased by 5 percent.
Tower said this had taken its share of the market above 9 percent.
Turnbull said Tower's focus on a simple and rewarding customer experience, combined with its digital and data approach, had contributed to the growth.
The board declared a final dividend of 2.5 cents per share, taking the total dividend to 5cps.
It was also exploring the possibility of returning $30.4m in value to shareholders through a compulsory share buyback.