File photo. Tower said it would extend its risk-based approach. Photo: supplied
Insurance group Tower has posted an improved profit on the back of increased premium income, lower costs and reduced claims.
Key numbers for the six months ended March compared with a year ago:
- Net profit $49.7m vs $36m
- Underlying profit $61.7m vs $36.6m
- Gross premium $297m vs $269m
- Forecast underlying profit $70-80m
- Interim dividend 8 cents per share
The New Zealand insurer said better weather led to a lower level of ordinary claims, - so-called business as usual claims - while premium income rose as it attracted new business and it kept a lid on its costs.
"These positive first-half results reflect Tower's commitment to delivering sustainable, profitable growth by upholding core insurance fundamentals: robust risk selection and pricing, and claims management," interim chief executive Paul Johnston said.
The company said it had improved risk selection, with 91 percent of new policies sold in the first half rated low or very low flood risk, compared with 86 percent the year before.
However, reduced-risk policies and greater market competition limited revenue growth, and there was a fall in vehicle insurance premiums because of rate reductions and a tightening in its risk appetite.
Johnston said it would extend its risk based approach.
"This year we will expand risk-based pricing to include sea surge and landslide risks, helping our customers better understand their risks and how these factors impact their insurance pricing."
Tower said it was still paying for continuing customer remediation-related costs and an increase in Canterbury earthquake cost estimates, as it received more claims than expected from the Natural Hazards Commission.
It had large event claims of $3m from the Dunedin floods in October last year, and expected that it would be paying out around $4m for claims from Cyclone Tam, which would be included in the second half report.
Tower had $50m set aside for major event claims for the full year.
