Tower reports solid H1 FY26 profit amid tough conditions

Tower (ASX:TWR) announced its financial performance for the half year ended March 31, navigating a challenging operating environment marked by pricing pressure, global volatility, and elevated weather-related claims.

The insurer delivered an underlying net profit after tax of NZ$36.8 million and a reported profit of NZ$22.9 million, down from NZ$61.7 million and NZ$49.7 million, respectively, in H1 FY25.

The prior year's exceptionally strong half had benefited from unusually benign weather conditions.

The Tower board has declared a fully imputed interim dividend of 5 cents per share.

Despite economic headwinds, which Tower expects will persist into the second half, the company successfully grew its customer base by 5% year-on-year to 327,000.

Tower CEO Paul Johnston noted that the addition of 15,000 new customers over the past 12 months was driven by competitive, risk-based pricing that balances customer affordability with portfolio resilience. Gross written premium rose 1% to $301 million.

The gap between underlying and reported profit reflects ongoing customer remediation costs tied to a now-resolved historical discount error in a legacy system, alongside software impairment and operational footprint streamlining.

The insurer's business-as-usual claims ratio rose to 44% (up from 38% in H1 FY25), while large event costs escalated to $18.5 million, compared to just $3 million in the previous prior-year half. The management expense ratio ticked up slightly to 31%.