Kiwi insurer Tower (ASX:TWR) upgraded its full-year FY25 guidance for underlying net profit after tax, now expecting between NZ$70 million ($65.6 million) and NZ$80 million ($74.8 million), up from the previous range of NZ$60 million ($56.1 million) to NZ$70 million ($65.6 million).
The revision assumes full utilisation of its NZ$50 million ($46.8 million) large events allowance.
To date, Tower has recorded one qualifying large event–the Dunedin floods in October 2024–with an estimated cost of NZ$3 million ($2.8 million).
The company is also responding to nearly 250 claims related to the Easter weekend storms, which may exceed the NZ$2 million ($1.9 million) threshold for a large event.
The improved guidance reflects better-than-expected business-as-usual claims performance, supported by favourable weather conditions, reduced inflation, fewer total loss house claims, and stronger risk selection.
However, Tower revised its gross written premiums growth guidance to the mid-single digits, down from the previously forecast 7%–12%.
The slowdown is attributed to a shift towards lower-risk policies and increased market competition, leading to reduced average premiums despite customer growth in the home insurance segment.
The management expense ratio guidance has been adjusted to under 31%, from the prior target of under 29%, due to lower GWP and increased strategic investment.
Tower expects MER to decline over the medium term as efficiency initiatives take effect.
The combined operating ratio is now forecast at 82%–84%. Reported profit, however, will be impacted by additional non-underlying costs, including ongoing customer remediation and a higher provision for Canterbury earthquake claims.