TWR - Tower Insurance.

[Leemsip]

Agree with that Independent Observer.
$12m or 44% of the profit (before tax) coming from the pacific islands. Last year this was only $1.4m on a similiar premium base, presumably due to a cyclone or whatever.
This has been a boom year for Tower and we wouldnt expect that sort of profit from the pacific every year.

Bit disturbed by that.

[Leemsip]

We should be looking at dividends payments in the next 12 months IMO.

Cash burn will be well down:
- build of their new system largely complete
- payments for chch surely next to nothing now
- loads of tax credits on the books which means no cash out the door for future NZ profits. I presume the pacific island profits still paying tax though
- youi at least a couple of mill cash increase
- a big chunk of expenses going forward will be to depreciate the new ICT system. This will be non-cash.

I would expect paying out 70% of NPAT wouldnt be an issue and still allow growth and a build of the balance sheet. If this occurred in 2020 and everything being the same as 2019 we would be looking at $17m profit, 400m odd shares * 70% = 3c per share dividend. Not sure I would be pumped about this given uncertainties in the pacific in future years.

If we said as tax and depreciation are non-cash and paid out dividends based on profit before these items = $34m, 400m shares * 70% = 6c per share. Definitely be pleased with that

Hmm

[Leemsip]

Not buying more of these just yet.

[Independent Observer AUNZ]

https://www.nzx.com/announcements/345686 [Tower CEO Richard Harding to depart late 2020]

Any thoughts on the upcoming changing of the guard? No sign of movement at the Board table though...

[Drummer]

sold out a couple of motnhs back at a lose, was in the market for house insurance.
AMI, current insurer, 3 weeks, no quote, then said they changed their ruls this week regarding houses with EQC claim... hopeless

Vero (via the bank) quick to quote, price OK.

Tower online quote system was excellent as was the quote for house, contents and car very impressed
Things could be looking up for them.....

[Cadalac123]

Anyone else see the improving balance sheet and possible benefits of dividend reintroduction / takeover ..

[golden city]

I am in patiently waiting for dividend reintroduce

[Cadalac123]

wonder if flight cancellations due to coronovirus would be claim losses for TWR?

[hogie]

wonder if flight cancellations due to coronovirus would be claim losses for TWR?

Or flood damage in South Island ...

[boysy]

Not sure how many Southland policies twr have nor flight cancelations as a result of a pandemic - perhaps we will hear more next week ....

[Dassets]

Don't think Tower does travel insurance

[aquaman]

Any loss from Pandemics are normally excluded from travel insurance

General Exclusions – applying to all sectionsThis policy does not cover any loss, damage, liability,death or incapacity directly or indirectly caused by orarising from:1. war, invasion, act of foreign enemy, war likeoperations (whether war is declared or not), civil war,mutiny, rebellion, revolution, insurrection, military orusurped power. (In respect of civil unrest only, thisexclusion does not apply to Section 1i. Evacuation –Civil Unrest Pacific Islands);2. Act of Terrorism – unless cover is otherwise providedunder individual sections of this policy. If we allegethat by reason of this clause, any loss or damage,cost or expense is not covered by this insurancethe burden of proving the contrary will be upon theinsured;3. nuclear weapons material;4. an actual or likely epidemic or pandemic, or thethreat of an epidemic or pandemic

[Rowdy Flat]

Don't think Tower does travel insurance

Yeah, they do. Not a significant part of their book thou'.

They have exposure to Southland but... all manageable.

Honestly... maybe consider mere minutes of simple research, rather than typing fear mongering posts.

[Cadalac123]

Yeah, they do. Not a significant part of their book thou'.

They have exposure to Southland but... all manageable.

Honestly... maybe consider mere minutes of simple research, rather than typing fear mongering posts.

Honestly I think this company is going to perform extremely well this year .

Balance sheet has demonstrated three years of steady growth. Significant turnaround year in fy19 with the IT transition and claim costs being tidied after the earthquake and the cyclones

Yeah risky stock in the sense that a major disaster can shake it but I see a dividend being reintroduced soon given last years performance and a strong cash position OR takeover offer

[boysy]

Yes divi reintroduced could be the catalyst for a rerate let’s hope the update next week reaffirms or increases guidance for FY20 ....

[winner69]

All going to plan

Interesting first time they’ve mentioned investment income lower than than forecast ....becoming a problem for most insurors as investment returns diminish

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/348388/316701.pdf

[trader_jackson]

suncorp NZ 5.4% GWP growth and IAG NZ 4.2% GWP growth... tower tracking to be more than double either of those at 11%... tower growing pretty fast but you wouldn't think so... the share price has been essentially flat for 3 and a half years...

[Cadalac123]

Guidance reaffirmed ! Awesome

[Balance]

suncorp NZ 5.4% GWP growth and IAG NZ 4.2% GWP growth... tower tracking to be more than double either of those at 11%... tower growing pretty fast but you wouldn't think so... the share price has been essentially flat for 3 and a half years...

Yes, sp has attempted uptrends twice over that period - to be flattened by capital raisings (2017 and 2019).

Company needs to demonstrate it does not need to raise any more capital and the best way to do that is to reinstate dividends.

If dividends are reinstated, expect the sp will put on at least 20% from here.

Let's see if AGM today mentions anything regarding dividends.

[Cadalac123]

The lower end of the guidance is a 63% increase in net income compared to FY19... will continue to hold this one till the full year report..

[Cadalac123]

Tower’s Board has determined that in FY20, Tower will pay a dividend of 50% to 70% of reported NPAT, where prudent to do so.

:t_up:

[Balance]

Tower’s Board has determined that in FY20, Tower will pay a dividend of 50% to 70% of reported NPAT, where prudent to do so.

:t_up:

Based upon the profit forecasts of $27m to $30m, that implies dividend yield of between 4.3% to 6.7%.

Looking very yummy indeed!

[macduffy]

Tower’s Board has determined that in FY20, Tower will pay a dividend of 50% to 70% of reported NPAT, where prudent to do so.

:t_up:

Reads well - until that last bit. Perhaps they mean "Tower's board will consider paying a dividend depending on profit results."

:confused:

[winner69]

Reads well - until that last bit. Perh

aps they mean "Tower's board will consider paying a dividend depending on profit results."

:confused:

Nicely placed ‘Pause’ after that ‘ depending on profit results’ script

Always look for hidden messages

[Cadalac123]

Fair enough though if another catastrophic event occurs or unseen event leading to negative cash flow paying dividends would be unwise .

There’s organic growth in the business and when dividends do get introduced this is going to do well as a stock

[Balance]

Yes, sp has attempted uptrends twice over that period - to be flattened by capital raisings (2017 and 2019).

Company needs to demonstrate it does not need to raise any more capital and the best way to do that is to reinstate dividends.

If dividends are reinstated, expect the sp will put on at least 20% from here.

Let's see if AGM today mentions anything regarding dividends.

4.9% up today - guess the next 15% gain will have to wait until there actually declare the dividend?

[Leemsip]

We should be looking at dividends payments in the next 12 months IMO.

Cash burn will be well down:
- build of their new system largely complete
- payments for chch surely next to nothing now
- loads of tax credits on the books which means no cash out the door for future NZ profits. I presume the pacific island profits still paying tax though
- youi at least a couple of mill cash increase
- a big chunk of expenses going forward will be to depreciate the new ICT system. This will be non-cash.

I would expect paying out 70% of NPAT wouldnt be an issue and still allow growth and a build of the balance sheet. If this occurred in 2020 and everything being the same as 2019 we would be looking at $17m profit, 400m odd shares * 70% = 3c per share dividend. Not sure I would be pumped about this given uncertainties in the pacific in future years.

If we said as tax and depreciation are non-cash and paid out dividends based on profit before these items = $34m, 400m shares * 70% = 6c per share. Definitely be pleased with that

Hmm

Called it earlier. I'm ****ing awesome. This is definitely worth $1. JUST GOT TO BE PATIENT!! Been a tough hold this ine

[Balance]

Called it earlier. I'm ****ing awesome. This is definitely worth $1. JUST GOT TO BE PATIENT!! Been a tough hold this ine

Let's hope Bain & its insurance arm do not make an early takeover offer and snatch the upside from other shareholders who may just not be as patient!

Seriously.

[Jaa]

Been ridiculously patient on this one as well. Considered it my contribution to Christchurch's recovery!

Good to see 60k existing policies on the new platform but will have to wait till 2021 to be complete and for all the old stuff to be turned off and the effeciencies to (hopefully!) drop to the bottom line.

[Independent Observer AUNZ]

Was anyone at the ASM? The Constitutional changes didn't get enough votes to pass; some of the instos must not have supported. Any explanation at the meeting?

[Leemsip]

Had an oz stock (qms) at 75c ish last year. Buy out offer was 1.22.
Hoping for something similar here

[Leemsip]

Tempted to buy more Monday. TWR is 1/3 of my portfolio tho.....

[Cadalac123]

Likely to have another bump up on actual dividend announcement but could dip between now and then

[Balance]

Called it earlier. I'm ****ing awesome. This is definitely worth $1. JUST GOT TO BE PATIENT!! Been a tough hold this ine

Biggest mistake some holders are going to make is to sell out just when the turnaround and recovery are gathering pace.

Saw many did it with Heartland Bank (which I happily hover up at 55c to 65c when PGC sold out) and what a stellar performance (and great dividends) one has received from that stock.

Difference is of course that TWR is more vulnerable to the big one-off events like earthquakes and weather events.

[winner69]

Biggest mistake some holders are going to make is to sell out just when the turnaround and recovery are gathering pace.

Saw many did it with Heartland Bank (which I happily hover up at 55c to 65c when PGC sold out) and what a stellar performance (and great dividends) one has received from that stock.

Difference is of course that TWR is more vulnerable to the big one-off events like earthquakes and weather events.

Always good buying under 70 eh mate

[Balance]

Always good buying under 70 eh mate

Well positioned, as is often said but more often untrue of lesser companies.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12309231

Tower stands tall in insurer spotlight

Here’s to 80c as the next stop on the way back to above $1.00.

[Independent Observer AUNZ]

Well positioned, as is often said but more often untrue of lesser companies.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12309231

Tower stands tall in insurer spotlight

Here’s to 80c as the next stop on the way back to above $1.00.

As much as I despise the Herald, I'd be keen to read this. I definitely don't want to spend my hard earned on one of their subscriptions! Shame.

[peat]

As much as I despise the Herald, I'd be keen to read this. I definitely don't want to spend my hard earned on one of their subscriptions! Shame.

They are all squeaky clean - everyone in the insurance industry is smelling of roses
That's what it says.

[aquaman]

They are all squeaky clean - everyone in the insurance industry is smelling of roses
That's what it says.

Im sure if I went home smelling of roses, the better half would not think im squeaky clean!
In fact, there would be some pretty serious questions asked

[peat]

Im sure if I went home smelling of roses, the better half would not think im squeaky clean!
In fact, there would be some pretty serious questions asked

I thought you'd be smelling of seaweed and mussels AQUAMAN!

Is Stiassny still there...? :ohmy:

[freddagg]

I thought you'd be smelling of seaweed and mussels AQUAMAN!

If he did the questions could be even more serious

[Independent Observer AUNZ]

Is Stiassny still there...? :ohmy:

Yep, and more entrenched than ever.

[Cadalac123]

Looks like they aren't going to impacted by travel cancellations?

[winner69]

Looks like they aren't going to impacted by travel cancellations?

And won’t be making much on investing the premium float ....the life and blood of insurance companies

[Cadalac123]

Majority in solid bonds though not the stock market?

[Independent Observer AUNZ]

And won’t be making much on investing the premium float ....the life and blood of insurance companies

Tower has almost nothing other than cash, bonds, term deposits...

As at FY19 annual report:
- $0.6m in equity securities
- $228.5m in fixed interest securities
- $67m in cash and equiv

[Cadalac123]

Winner69 just trying to down ramp any stock I reply on with zero research

[macduffy]

Winner69 just trying to down ramp any stock I reply on with zero research

Really? Not a lot of return though from fixed interest and cash these days.

[winner69]

Really? Not a lot of return though from fixed interest and cash these days.

.....and the lower interest rates could change actuarial assumptions

[Cadalac123]

Really? Not a lot of return though from fixed interest and cash these days.

Um what? In these current circumstances having a fixed return and not being damped down by a market decline is more than favourable for an insurance company. Try and read up on how insurance companies run with winner69 before trying to down ramp the stock.

[percy]

I would be careful telling your grandmother how to suck eggs.
I would listen to Macduffy long before I would listen to you.
In fact Macduffy, is one of a very select few who I take notice of.
Macduffy has seen it all before.

[Cadalac123]

I would be careful telling your grandmother how to suck eggs.
I would listen to Macduffy long before I would listen to you.
In fact Macduffy, is one of a very select few who I take notice of.
Macduffy has seen it all before.

Why would I care if you'd listen to him before me? I don't even know who you are.

[winner69]

I would be careful telling your grandmother how to suck eggs.
I would listen to Macduffy long before I would listen to you.
In fact Macduffy, is one of a very select few who I take notice of.
Macduffy has seen it all before.

Yep macduffy a good guy and seen it all ...maybe even a bit more than me (and you of course)

[winner69]

I did note Tower said in last update that investment income is going to be below forecast because of the cut in the OCR

Full year npat guidance remained at $27m to $30m ....that’s good ...but hope it doesn’t end up at $27m because that is less than F19, especially seeing there’s been strong growth

[Independent Observer AUNZ]

I did note Tower said in last update that investment income is going to be below forecast because of the cut in the OCR

Full year npat guidance remained at $27m to $30m ....that’s good ...but hope it doesn’t end up at $27m because that is less than F19, especially seeing there’s been strong growth

Yes investment return is still under pressure due to OCR trend... which have only temporarily abated, really. But its not hugely material for Tower - their profitability is more tightly woven to underwriting performance and the potential of repeated small to medium "catastrophe" events.

[Cadalac123]

Yeah you guys are right TWR isn't good so don't buy it
great

[winner69]

Yeah you guys are right TWR isn't good so don't buy it
great

Maybe a good idea not to buy ,,,they said benign weather has helped the first four months of year ..maybe the calm before a few decent storms to hit NZ

[Scrunch]

Maybe a good idea not to buy ,,,they said benign weather has helped the first four months of year ..maybe the calm before a few decent storms to hit NZ

Thankfully economic storm's tend not to damage buildings that badly and therefore don't result in insurance claim's.

[Cadalac123]

What do people make of the recent report? Tempted to top up at this level

[dubya]

Can someone please tell me the reasons why Tower haven't paid a dividend in the last few years? They seem to have been doing OK....

[Independent Observer AUNZ]

Can someone please tell me the reasons why Tower haven't paid a dividend in the last few years? They seem to have been doing OK....

Where to start....

They've had regular impacts from Christchurch Earthquake claim deterioration, multiple capital raises to stave off the regulators and takeover attempts, and a large reinsurance litigation case that settled out of court. Worth noting that one of the previous CEOs (Hancock) instigated a share buyback to try inflate the share price... all just before one of those huge Christchurch claim deterioration events... absolutely ludicrous behavior... although he did oversee the instigation of that reinsurance cover which ultimately saved about $20m-ish of balance sheet exposure. They were just now looking good to start paying regular dividends after the acquisition of Youi's policies and their new technology platform now in place before Covid-19 hit. I have no idea what the impacts of Covid-19 are for general insurance though... Insurance is considered an "essential service" so they're still serving customers, but I can only assume somewhat of a slow-down in terms of new policies... but also no cars on the roads and everyone at home means that automobile accidents and burglary claims are all down to near-zero levels.

[dubya]

Where to start....

They've had regular impacts from Christchurch Earthquake claim deterioration, multiple capital raises to stave off the regulators and takeover attempts, and a large reinsurance litigation case that settled out of court. Worth noting that one of the previous CEOs (Hancock) instigated a share buyback to try inflate the share price... all just before one of those huge Christchurch claim deterioration events... absolutely ludicrous behavior... although he did oversee the instigation of that reinsurance cover which ultimately saved about $20m-ish of balance sheet exposure. They were just now looking good to start paying regular dividends after the acquisition of Youi's policies and their new technology platform now in place before Covid-19 hit. I have no idea what the impacts of Covid-19 are for general insurance though... Insurance is considered an "essential service" so they're still serving customers, but I can only assume somewhat of a slow-down in terms of new policies... but also no cars on the roads and everyone at home means that automobile accidents and burglary claims are all down to near-zero levels.

Great. Thanks for that. I saw this in today's paper so thought I'd take a look at them.

https://www.stuff.co.nz/business/120668335/tower-sues-eqc-for-80-million-for-fixing-earthquakedamaged-canterbury-homes

[trader_jackson]

When alot of companies are canceling dividends left, right and centre, I believe TWR will pull through, in fact we may well be looking at double digit gross yield, bit like what HLG use to pay.

[Scrunch]

... but also no cars on the roads and everyone at home means that automobile accidents and burglary claims are all down to near-zero levels.

While domestic burglary claims should be down, what's going to happen to commercial burglary claims? There's almost certain to be some enterprising crim's that have already, or will be breaking into commercial premises as there's a lot less eyeballs on these locations than normal. An added bonus is knowing there's unlikely to be anyone finding the evidence of their naughty deeds for another 3 weeks minimum. I don't know however is this is a big or tiny bit of Towers insurance book.

[Independent Observer AUNZ]

While domestic burglary claims should be down, what's going to happen to commercial burglary claims? There's almost certain to be some enterprising crim's that have already, or will be breaking into commercial premises as there's a lot less eyeballs on these locations than normal. An added bonus is knowing there's unlikely to be anyone finding the evidence of their naughty deeds for another 3 weeks minimum. I don't know however is this is a big or tiny bit of Towers insurance book.

It is almost zero exposure on Tower's book - they only offer small enterprise commercial insurance; things like dairies, small workshops, man-in-a-van type operations.

There is an increased opportunity for other claims though, for things where accidents in the home are the cause.

I expect renewal rates will be down slightly, but not dramatically - its only 4 weeks at this stage. In the longer term a recession will mean less can afford insurance so their ability to compete with others for their share of the dwindling pie will be critical.

None of this changes their expense-base though - so it comes down to whether every dollar received in new business can cover the fixed cost base, even if claim costs are down.

Another unknown is where the reinsurance market is in all this... there could be major cost savings there if the market is extremely soft globally.

[Independent Observer AUNZ]

Great. Thanks for that. I saw this in today's paper so thought I'd take a look at them.

https://www.stuff.co.nz/business/120668335/tower-sues-eqc-for-80-million-for-fixing-earthquakedamaged-canterbury-homes

No problem. The good news is that Tower recently shifted their treatment of this so if they are successful in their claim, it will be a net positive for the bottom line and could support hefty dividends.

[Halebop]

It is almost zero exposure on Tower's book - they only offer small enterprise commercial insurance; things like dairies, small workshops, man-in-a-van type operations.

There is an increased opportunity for other claims though, for things where accidents in the home are the cause.

I expect renewal rates will be down slightly, but not dramatically - its only 4 weeks at this stage. In the longer term a recession will mean less can afford insurance so their ability to compete with others for their share of the dwindling pie will be critical.

None of this changes their expense-base though - so it comes down to whether every dollar received in new business can cover the fixed cost base, even if claim costs are down.

Another unknown is where the reinsurance market is in all this... there could be major cost savings there if the market is extremely soft globally.

I think the potential for triggering restriction of access clauses on Business Interruption policies is a bigger commercial insurer risk than burglaries or theft on material damage policies because law and order is largely being maintained.

If the pandemic does trigger these, the impact on RI rates could be profound. Re-insurers have been referring to the obliquely over the last few days because the risk isn't well understood but some are worried they are on the hook for claims in unexpected ways with governments stepping into the fray with emergency legislation like lock downs and "essential service" restrictions. Not certain yet but we could be seeing the worlds biggest insurable event unfold in slow motion.

[winner69]

Wonder if Tower will do a QBE and have a ‘preemptive’ capital raise

QBE seemed pretty gloomy about the future.

[Independent Observer AUNZ]

Wonder if Tower will do a QBE and have a ‘preemptive’ capital raise

QBE seemed pretty gloomy about the future.

QBE and Tower very different businesses I would have thought.

[tim23]

Gee only had capital raise last year - please not again!

[trader_jackson]

Wonder if Tower will do a QBE and have a ‘preemptive’ capital raise

QBE seemed pretty gloomy about the future.

I would not have thought so, but the thought did cross my mind.
Could just not pay a dividend and that would be a stealth capital raise.

[nztx]

I would not have thought so, but the thought did cross my mind.
Could just not pay a dividend and that would be a stealth capital raise.

Didn't they indicate that resuming Dividend payments was planned in 2020/21 year ?

[Cadalac123]

Didn't they indicate that resuming Dividend payments was planned in 2020/21 year ?

That was before the coronovirus though.. It's difficult to ascertain the impact this has had on TWR.
It was a solid dividend play prior, but now i'm not really sure it's a bit of a stab in the dark until we get
official info. Can speculate bear or bull cases.

[nztx]

That was before the coronovirus though.. It's difficult to ascertain the impact this has had on TWR.
It was a solid dividend play prior, but now i'm not really sure it's a bit of a stab in the dark until we get
official info. Can speculate bear or bull cases.

I dont see many disasters since
Returns & non cash write downs on the Investment Reserve Funds these sort of outfits have will be a different story

[Cadalac123]

I dont see many disasters since
Returns & non cash write downs on the Investment Reserve Funds these sort of outfits have will be a different story

Yeah I agree and I know what you are saying, but they have been extremely woobly about the dividend reintroduction for a while now and I wouldn't be surprised if they delayed it.

The IT transformation was great too I guess, but need to be realistic about the slowdown outweighing benefits of no disasters.

[Jim]

It just a dog. It suck a big bundle of my hard earn money. They better not.....

[JeremyALD]

Hi everyone, can someone clarify what the 228m of fixed interest securities are on towers Balance sheet under assets. Is this effectively cash? Correct me if I'm wrong but this would mean they are holding almost 300m effectively in cash?

[nztx]

Hi everyone, can someone clarify what the 228m of fixed interest securities are on towers Balance sheet under assets. Is this effectively cash? Correct me if I'm wrong but this would mean they are holding almost 300m effectively in cash?

Note C5 to 2019 Accounts:

"• The fair value of fixed interest securities is based on the maturity profile and price/yield."

At a guess - Govt / Local Body Stock & similar Assets

[JeremyALD]

Note C5 to 2019 Accounts:

"• The fair value of fixed interest securities is based on the maturity profile and price/yield."

At a guess - Govt / Local Body Stock & similar Assets

That's a huge amount of money / investment for a company with hardly any debt to have a market cap of 270m. Am I missing something?

[Cadalac123]

That's a huge amount of money / investment for a company with hardly any debt to have a market cap of 270m. Am I missing something?

Insurance companies keep a lot of money floating in high grade bonds. It isn't anything special to TWR.

TWR's balance sheet is good right now but for different reasons. The low OCR will mean investment income will decrease but it's not a significant portion of total revenue. But at the moment any extrapolation of TWR's balance sheet is entirely dependent on how they've been impacted during this period. We can hope claim expenses were done and so forth but it's all assumptions. Long-term I do see good potential in TWR, but as with any insurance company this relies on no catastrophic events.

[JeremyALD]

Insurance companies keep a lot of money floating in high grade bonds. It isn't anything special to TWR.

TWR's balance sheet is good right now but for different reasons. The low OCR will mean investment income will decrease but it's not a significant portion of total revenue. But at the moment any extrapolation of TWR's balance sheet is entirely dependent on how they've been impacted during this period. We can hope claim expenses were done and so forth but it's all assumptions. Long-term I do see good potential in TWR, but as with any insurance company this relies on no catastrophic events.

Thanks both, really appreciated :)

[aquaman]

Thanks both, really appreciated :)

With my involvement in another company our vehicle claims are down approx 80% and home claims down approx 50% over the shutdown period. I don't have any commercial info .
Premiums still coming in so presently in a good space but one weather event can change things.!

[Leemsip]

Half the profit from the Pacific islands anyway, so profit totally swings on the storm season up there

[macduffy]

There's currently pressure from some quarters for insurance companies to reduce premiums where risks are reduced, eg cars locked in garages or seldom used. Some companies have indicated that they are amenable to the idea. Is TWR one of these?

[tim23]

There's currently pressure from some quarters for insurance companies to reduce premiums where risks are reduced, eg cars locked in garages or seldom used. Some companies have indicated that they are amenable to the idea. Is TWR one of these?

As I Tower shareholder, hope they don't rebate premiums or any other company for that matter, while I'm not using my car much I have reduced costs anyway, besides Tower needs a break and I wouldn't mind a dividend!

[Sideshow Bob]

There's currently pressure from some quarters for insurance companies to reduce premiums where risks are reduced, eg cars locked in garages or seldom used. Some companies have indicated that they are amenable to the idea. Is TWR one of these?

In a similar situation, Southern Cross emailed yesterday and said that with the savings last month/support customers/blah blah, they are returning $50 million to customers (approx. 880,000 clients). So about $55 each.

They are supposedly "not for profit". (After my premiums having gone up 123% over 3 years, and never having claimed, I take a bit of a dim view of them....)

[nztx]

As I Tower shareholder, hope they don't rebate premiums or any other company for that matter, while I'm not using my car much I have reduced costs anyway, besides Tower needs a break and I wouldn't mind a dividend!

Likewise .. wouldn't mind a Div either after past Cap raise & stalling off investors

Any idea how far their Islands business does business ?

Do they have exposure to Fiji ?

[winner69]

Good on Tower not 'profiting' from the virus re car insurances

https://www.stuff.co.nz/business/121122858/tower-follows-aa-insurances-coronavirus-lockdown-profit-pledge


Good for long term customer loyalty

[Independent Observer AUNZ]

Likewise .. wouldn't mind a Div either after past Cap raise & stalling off investors

Any idea how far their Islands business does business ?

Do they have exposure to Fiji ?

Tower are the largest personal property insurer in Fiji. Circa 25% market share.

[tim23]

Good on Tower not 'profiting' from the virus re car insurances

https://www.stuff.co.nz/business/121122858/tower-follows-aa-insurances-coronavirus-lockdown-profit-pledge


Good for long term customer loyalty

As much as would like a dividend I think this is a smart play from a marketing/publicity perspective and highlights them being NZ owned so I'm pretty relaxed about it. The fact that they are doing it suggests things are in good shape for dividend anyway?

[Jaa]

As a long suffering Tower shareholder, I am not sure I agree. People still have the option to drive their car and still receive fire and theft protection. Feels a bit like tails we lose and heads we lose again.

Agree its good PR and a vote of confidence but there better not be any more capital raisings because of this.

[macduffy]

there better not be any more capital raisings because of this.

And if there are?

;)

[nztx]

And if there are?

;)

I'd like to hear about the next Insurance Add-on (if there is one) on their wish list, to have the cap out to
long suffering shareholders for - if they do go this way

Even better, what sort of poor miserable excuses get trotted out for not reinstating dividends after having holders
basically fork out for the last acquisition (Youi - wasn't it ?) - if that occurs

[tim23]

Given the absence of dividend for so long todays step might bode well - rebate premiums and pay dividend?

[Jaa]

And if there are?

;)

:ohmy: :scared:

They should rebate the money against renewal payments for the same policies to lock in wavering customers and drive churn down. That at least keeps cash in the business and makes some sense. Anyone know if that is what they are doing?

[Cadalac123]

:ohmy: :scared:

They should rebate the money against renewal payments for the same policies to lock in wavering customers and drive churn down. That at least keeps cash in the business and makes some sense. Anyone know if that is what they are doing?

That would be really sensible. All we have is that article linked which isn't fully clear but sort of implies the same method being used as southern cross.. Would be a shame for no dividend, but it's understandable I guess.

[winner69]

Does this imply FY20 profit Will be $4m less than expected

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/351949/321127.pdf

[trader_jackson]

Does this imply FY20 profit Will be $4m less than expected

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/351949/321127.pdf

I think it implies that there is still going to be a healthy profit, that no cap raise is needed, and that a dividend may finally be on the way... but won't know for sure for another month ish.

[Cadalac123]

I think it implies that there is still going to be a healthy profit, that no cap raise is needed, and that a dividend may finally be on the way... but won't know for sure for another month ish.

Let's hope them refunding claims despite the cyclone means they are in a comfortable position and not that they are making a horrible business decision to save face

[Independent Observer AUNZ]

Let's hope them refunding claims despite the cyclone means they are in a comfortable position and not that they are making a horrible business decision to save face

Pretty much all indicators have been positive this year up until the weather in the Pacific and Covid-19. Not sure about dividend, but definitely no indication that this is about "saving face"

[Gerald]

https://www.nzx.com/announcements/352542

New CEO.

HY 20 results at the end of the month.

[Leemsip]

Im expecting a decent first half of 2020 with pre-tax profit of $18- 20m. Modelling this based on
- lower canty provision cost $1m,
- youi increase profit of $2m,
- large event in the pacific cost of $7m (probably overcooked this),
- lower claims in nz due to covid $1m upside,
- increase of 10% gross written premiums .
- increase in depreciation of $3.5m due to the new system and a mill or so of efficiencies due this as well.
- non-underlying nonsense of $2m (who knows)

Simplisticly setting up a full year of $40m before tax and $27m after tax - bang on guidance. This WILL mean a dividend announcement as the balance sheet is fine now! I expect them to be able to payout 70% (rather than 50%) due to the large non-cash costs now present in the P&L.

70% of $27m is $19m across 428m shares = 4.4c divi fully imputed.

Current share price is $0.62 so a net 7% return in an average year with 10% growth across the book.

[Cadalac123]

Im expecting a decent first half of 2020 with pre-tax profit of $18- 20m. Modelling this based on
- lower canty provision cost $1m,
- youi increase profit of $2m,
- large event in the pacific cost of $7m (probably overcooked this),
- lower claims in nz due to covid $1m upside,
- increase of 10% gross written premiums .
- increase in depreciation of $3.5m due to the new system and a mill or so of efficiencies due this as well.
- non-underlying nonsense of $2m (who knows)

Simplisticly setting up a full year of $40m before tax and $27m after tax - bang on guidance. This WILL mean a dividend announcement as the balance sheet is fine now! I expect them to be able to payout 70% (rather than 50%) due to the large non-cash costs now present in the P&L.

70% of $27m is $19m across 428m shares = 4.4c divi fully imputed.

Current share price is $0.62 so a net 7% return in an average year with 10% growth across the book.

Do you really think they’ll pay a dividend as well as paying out claim holders ..

[Independent Observer AUNZ]

$40m FY before tax is very optimistic I would have thought.

[tim23]

My hopes of dividend were dashed when they decided to refund customers for premiums while their cars not been driven much during lockdown.

[macduffy]

I wouldn't blame any company for being cautious about paying dividends in today's circumstances. Favouring policy holders is another prudent move when others have done this. But I'm neither a shareholder nor a policy holder, so what would I know.

Disc: Sold my TWR many moons ago.

[Leemsip]

I wouldn't blame any company for being cautious about paying dividends in today's circumstances. Favouring policy holders is another prudent move when others have done this. But I'm neither a shareholder nor a policy holder, so what would I know.

Disc: Sold my TWR many moons ago.

This has been a very testing share to hold for the last few years (Im a high conviction holder and will NEVER sell, despite constant disappointments). Its now or never for tower...... come on boys, lets see some reaffirmed guidance!

[Balance]

This has been a very testing share to hold for the last few years (Im a high conviction holder and will NEVER sell, despite constant disappointments). Its now or never for tower...... come on boys, lets see some reaffirmed guidance!

Looks like FY20 will be reduced to $24.5m - $27.5m, in the absence of any offsetting positives to Cyclone Harold?

Guidance was affirmed at the ASM on 14 Feb 2020 so :

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/348424/316745.pdf

There is no change to Tower’s previously communicated FY20 guidance of underlying NPAT of $27 - $30 million.

But there has been an additional significant weather event :

https://www.nzx.com/announcements/351949

This is $2.5m - $4.5m more than the $8m large event assumption in Tower’s FY20 market guidance.

[Balance]

My hopes of dividend were dashed when they decided to refund customers for premiums while their cars not been driven much during lockdown.

It may be that the company is feeling confident about their profit outlook which is why it decided to do the refund as a goodwill gesture (to be applauded).

Remember that Insurance is an essential service.

[850man]

Pressure in the public forum for insurance companies to do this, they really had no choice here other than to offer premium rebates. While this has to have an impact to profit, the bigger picture is their image in the eyes of customers and potential customers will get a boost from this move and will likely attract more customers but will certainly not turn customers away which has to be good long term. Let's hope the right balance is achieved between giving rebates and growing profit in the business.

[Balance]

Do you really think they’ll pay a dividend as well as paying out claim holders ..

Actually I think that’s a good sign that they will - probably not the 70% they have indicated but I think 35% as a start.

Market thinks otherwise so let’s see what happens on 28 May.

[Independent Observer AUNZ]

Actually I think that’s a good sign that they will - probably not the 70% they have indicated but I think 35% as a start.

Market thinks otherwise so let’s see what happens on 28 May.

On balance, Balance, I agree. The Board will be anxious to start returning dividends and I think something like 35-50% would be a decent outcome for all stakeholders.

[Balance]

Sp is firming nicely ahead of the results tomorrow.

Market anticipating the payment of a dividend?

[macduffy]

Sp is firming nicely ahead of the results tomorrow.

Market anticipating the payment of a dividend?

Possibly. But RBNZ governor is drawing attention to the need for insurers and second tier financiers to shore up their capital. If they take that seriously they'll follow the lead of the banks and defer dividends at this time.

[sb9]

Possibly. But RBNZ governor is drawing attention to the need for insurers and second tier financiers to shore up their capital. If they take that seriously they'll follow the lead of the banks and defer dividends at this time.

True, I doubt dividend would be on the cards tomorrow.

[Independent Observer AUNZ]

Due to personal circumstance and re-balancing, I've sold my holding - I think TWR is well placed though and think they will go to dividend in 6 months and be steady from there on. They are well positioned to take market share from the other incumbents so I'll be keeping a close eye.

[bull....]

insurance companies very at risk in a low rate or negative rate environment of going bust as highlighted by RBNZ

[Cadalac123]

insurance companies very at risk in a low rate or negative rate environment of going bust as highlighted by RBNZ


Um why would they go bust. Lose some
Revenue from first rates sure but completely bust ?

[bull....]

Um why would they go bust. Lose some
Revenue from first rates sure but completely bust ?

falling investment revenue from low returns. keeps getting worse as rates go even lower. unlike banks it isnt as easy for them to maintain a margin. guess they could stop insuring more high risk stuff or jack your premiums thru the roof etc but even that has a limit. big event claims wipes them out as they dont have the revenue to payout even with re-insurance. aus insurance company reporting provides good insights into the delemma of falling investment returns

[Cadalac123]

falling investment revenue from low returns. keeps getting worse as rates go even lower. unlike banks it isnt as easy for them to maintain a margin. guess they could stop insuring more high risk stuff or jack your premiums thru the roof etc but even that has a limit. big event claims wipes them out as they dont have the revenue to payout even with re-insurance. aus insurance company reporting provides good insights into the delemma of falling investment returns

Sure but their investment returns are currently an insignificant portion of their revenue so how would that lead them to going bust

Disc not a holder

[bull....]

Sure but their investment returns are currently an insignificant portion of their revenue so how would that lead them to going bust

Disc not a holder

thats why i mentioned there premiums you pay can only go up so much before people refuse to insure cause it costs to much , yet the cost of claims keeps rising.

thats why the investment returns are important

[Cadalac123]

thats why i mentioned there premiums you pay can only go up so much before people refuse to insure cause it costs to much , yet the cost of claims keeps rising.

thats why the investment returns are important

I’m not disputing your point but more your idea they’ll go bust which seems a little rash of a conclusion from what you’ve stated . Either way let’s see how bad this impacts them.
In relation to your point about risk of catastrophic events that’s an inherent risk with every insurance company during ant macroenvironmental climate

[bull....]

I’m not disputing your point but more your idea they’ll go bust which seems a little rash of a conclusion from what you’ve stated . Either way let’s see how bad this impacts them.
In relation to your point about risk of catastrophic events that’s an inherent risk with every insurance company during ant macroenvironmental climate

i didnt mean tower will go bust just that insurers in general are more at risk now of it being a possibilty without the investment returns

[trader_jackson]

A messy, but solid result, with a solid outlook.
Far from the doom and gloom some others seem be trumpeting on here.

[winner69]

A messy, but solid result, with a solid outlook.
Far from the doom and gloom some others seem be trumpeting on here.

Jeez t_j how can something be messy and solid?

No divie must be a disappointment to you though.

[Sideshow Bob]

Jeez t_j how can something be messy and solid?

No divie must be a disappointment to you though.

W69 haven't you ever heard of something being messily solid, or solidly messy??

More seriously, in the current world, no divvy can't be a surprise? Especially after just making redundancies this week.

[850man]

revenue up 11%, Profit up 24% Portfolio growth of 11.9% projected to continue. Maybe that's the problem, if it were a gloomy outlook (e.g. AIR) the SP would just take off.

No 1st half divvy is understandable with the redundancies, a "possibility" of a 2nd half one.

[trader_jackson]

Would not be a good look winner to pay a dividend they day they announce 108 job losses.
Might be more acceptable to do so in 6 months time (at full year), and they certainly appear to be in a position to do so.

[bull....]

dividend in your dreams, they being saying ones coming for over a year now.

[Gerald]

On a PE of 9.6-10.8 if fy expectations are met, not many companies this cheap on the NZX.

They could have atleast declared a 50% dividend, the balance sheet can clearly handle it. Might be reluctant to announce one before the new CEO begins.

Also the car refunds cost 6.8m if anyone was wondering (1.7 Timaru hailstorms :scared:)

[winner69]

On a PE of 9.6-10.8 if fy expectations are met, not many companies this cheap on the NZX.

They could have atleast declared a 50% dividend, the balance sheet can clearly handle it. Might be reluctant to announce one before the new CEO begins.

Also the car refunds cost 6.8m if anyone was wondering (1.7 Timaru hailstorms :scared:)

PE around 10 seems fair enough for such a company

Quakes getting closer to big centers this week ...Levin not far away from Wellington hmmm

[Cadalac123]

Meet that NPAT guidance and there will be no reason for no dividend . The previous years they didn’t have a dividend the NPAT was negative year on year so not sure why It was a surprise

[macduffy]

Meet that NPAT guidance and there will be no reason for no dividend . The previous years they didn’t have a dividend the NPAT was negative year on year so not sure why It was a surprise

No, no surprise there. It pays for the financial sector to take heed of the RBNZ Governor's "advice".

[traineeinvestor]

revenue up 11%, Profit up 24% Portfolio growth of 11.9% projected to continue. Maybe that's the problem, if it were a gloomy outlook (e.g. AIR) the SP would just take off.

No 1st half divvy is understandable with the redundancies, a "possibility" of a 2nd half one.

While positive, operating cash flow didn't wasn't as strong as I would expect. Otherwise it looked like a decent result. Share price didn't move post announcement so in line with market expectations.

Disclosure: not held

[Jaa]

Job losses were inevitable after YOUI was merged in and customers migrated to the new self-serve platform. RBNZ strongly encouraging insurers to preserve capital so no chance of a dividend.

Amazing after many years of trying, they still haven't over provisioned for the Canterbury earthquakes, which still cost them $1.1m in 6 months.

Tower investors will have to wait another year (large claim events permitting) for our day or for the EQNZ recoveries claim.

[Leemsip]

Slightly better than my expectations below of $18m-$20m pretax, with a $22m pre tax and a $15m post tax profit. As per other posters a $30m full year post tax profit on the whole of company value of $269m is pretty good. Market hates it though. Contrary to all expectations no divi annoucement. I guess they are waiting to settle the EQC receivable before announcing a dividend and no guidance on when this might occur (now in the courts).

This share is killing me, good luck to all us holders



Im expecting a decent first half of 2020 with pre-tax profit of $18- 20m. Modelling this based on
- lower canty provision cost $1m,
- youi increase profit of $2m,
- large event in the pacific cost of $7m (probably overcooked this),
- lower claims in nz due to covid $1m upside,
- increase of 10% gross written premiums .
- increase in depreciation of $3.5m due to the new system and a mill or so of efficiencies due this as well.
- non-underlying nonsense of $2m (who knows)

Simplisticly setting up a full year of $40m before tax and $27m after tax - bang on guidance. This WILL mean a dividend announcement as the balance sheet is fine now! I expect them to be able to payout 70% (rather than 50%) due to the large non-cash costs now present in the P&L.

70% of $27m is $19m across 428m shares = 4.4c divi fully imputed.

Current share price is $0.62 so a net 7% return in an average year with 10% growth across the book.

[winner69]

Even more lower north island quakes

[850man]

If they continue with their current plan, workforce downsizing will have a positive effect on the cost line and benefit end of FY profit. Yeah there's always the possible impact of unexpected events but that's what insurance is all about, we know that already. Overall, what's not to like apart from no divvy just yet? You are right though Leemsip, the market doesn't like it. Have to bide our time a bit yet to prove them wrong.
Disc - hold a few


Slightly better than my expectations below of $18m-$20m pretax, with a $22m pre tax and a $15m post tax profit. As per other posters a $30m full year post tax profit on the whole of company value of $269m is pretty good. Market hates it though. Contrary to all expectations no divi annoucement. I guess they are waiting to settle the EQC receivable before announcing a dividend and no guidance on when this might occur (now in the courts).

This share is killing me, good luck to all us holders

[winner69]

These arguments could come to NZ

Hope Tower don’t have too many such policies

https://www.smh.com.au/business/banking-and-finance/insurers-deny-business-insurance-claims-as-battle-begins-20200605-p55000.html

[Marilyn Munroe]

These arguments could come to NZ

Hope Tower don’t have too many such policies

https://www.smh.com.au/business/banking-and-finance/insurers-deny-business-insurance-claims-as-battle-begins-20200605-p55000.html

It is usual for business interruption insurance to mirror material damage cover. Thus if you had fire cover for your building and contents this risk would also be covered in the business interruption cover.

I would expect pandemic cover in business interruption insurance to be the exception rather than the rule.

Boop boop de do
Marilyn

[Scrunch]

These arguments could come to NZ

Hope Tower don’t have too many such policies

https://www.smh.com.au/business/banking-and-finance/insurers-deny-business-insurance-claims-as-battle-begins-20200605-p55000.html

You would have to guess they don't have much from slide 49 of the recent 2020 HY report. This had NZ revenue being pretty much all householder products: $65.3m (House), $27.5m (Contents), $56.3m (Motor) and $4.5m (Other). If the combination of Business Asset, Commercial Vehicle, Business interruption and Business liability insurance is all bundled into the 3% of NZ revenues in other, the exposure to business interruption claims would appear to be small. This doesn't remove the risk of mis-priced the risk with only a little bit of revenue and a huge claim.

[dreamcatcher]

HOLD..... just cannot get excited about this stock

[Jim]

HOLD..... just cannot get excited about this stock

If you want to erode you capital and no dividend just buy into this company that forever begging for more money from shareholders

[Independent Observer AUNZ]

You would have to guess they don't have much from slide 49 of the recent 2020 HY report. This had NZ revenue being pretty much all householder products: $65.3m (House), $27.5m (Contents), $56.3m (Motor) and $4.5m (Other). If the combination of Business Asset, Commercial Vehicle, Business interruption and Business liability insurance is all bundled into the 3% of NZ revenues in other, the exposure to business interruption claims would appear to be small. This doesn't remove the risk of mis-priced the risk with only a little bit of revenue and a huge claim.

Correct. Very little exposure to commercial in their book. What they do have is heavily reinsured from what I can tell. Pacific Islands is a bit of a different story as most of their book is on the commercial end of the spectrum... again heavily reinsured all the same.

[Independent Observer AUNZ]

If you want to erode you capital and no dividend just buy into this company that forever begging for more money from shareholders

To be fair, if you took the Canterbury Earthquake situation away this would have been a massive success story. In recent years they are bouncing forward really well and are on a strong trajectory - their digital stuff looks like it is the best in the market right now.

[winner69]

Hope Auckland tornadoes aren’t as expensive as Timaru hailstones

[winner69]

Hope Tower don’t have too many claims out of Northland.

[trader_jackson]

Hope Tower don’t have too many claims out of Northland.

No worries winner - with the share price virtually at an all time low, one would think a much bigger impact is being priced in than "only" Auckland tornadoes + Northland floods etc

[Paradox]

No worries winner - with the share price virtually at an all time low, one would think a much bigger impact is being priced in than "only" Auckland tornadoes + Northland floods etc

Also...$7.5m refund
.
https://www.tower.co.nz/about-us/news/2020/tower-gives-back-to-customers

[winner69]

No worries winner - with the share price virtually at an all time low, one would think a much bigger impact is being priced in than "only" Auckland tornadoes + Northland floods etc

Just think that world sees insurance companies as not good investments ....can’t really blame them

Climate makes them risky as and they can’t even make a buck out of ‘investing’ the premiums (float)

[Southern Lad]

Also...$7.5m refund
.
https://www.tower.co.nz/about-us/news/2020/tower-gives-back-to-customers

With the IAG brands playing hard ball on whether they will follow TWR and the Suncorp brands, I don’t see the decision by TWR to pass back this windfall gain as a bad think. Always better to play the long game and show some policy holder sympathy.

[winner69]

With the IAG brands playing hard ball on whether they will follow TWR and the Suncorp brands, I don’t see the decision by TWR to pass back this windfall gain as a bad think. Always better to play the long game and show some policy holder sympathy.

Booked travel last October for April/May trip and had travel insurance with Southern Cross

Of course travel didn’t happen and we got full refunds for everything (including AIR) but assumed they had carried some risk for some months didn’t even think of getting a refund on the insurance ...but they sent me a letter saying no travel full refund of policy.

Know where I go next time.

[Gerald]

https://imgur.com/BWngoq4

Only been with TWR for 6 months but she's a hard master :p Think i'll console myself that a dividend isn't too far away and there are other crazies (like Salt) out there :)

[tim23]

Thought dividend was coming last time but they gave rebate to drivers...

[Cadalac123]

Thought dividend was coming last time but they gave rebate to drivers...

yeah questionable move tbh

[nztx]

yeah questionable move tbh

TWR sure as hell knows how to punish it's shareholders .. the same collective mob who got the call with a carrot dangled & who coughed up for the previous excuse used to buy up the Youi outfit up as well

The ongoing chapters of excuses for withholding Div's will only continue to be swallowed for so long until the calls
start rolling in for changes to inhabitants on the board table riding the gravy train treating it's investors so poorly

In receipt of a second lot of nonsense, it was easy to find far more attractive & better coy's to park up a few investment dollars,
which do portray a far more generous (and less lousy) recent track record.

Would think twice about holding in TWR in future and the same goes for other contact or doing business with the outfit

Fair is Fair after all

It is no wonder the SP has gravitated in the lowly regions it has while this has been going on

The High Flyers on the board should know considerably better

[Leemsip]

Its a tough hold alright.

Is TWR still going to court? https://www.tower.co.nz/about-us/news/2020/tower-insurance-takes-eqc-to-court

Cant find anything on this on the interweb...

Resolution on this $80m claim on EQC is holding back the divis and a $1 share price....

[Marilyn Munroe]

IAG Australia has delivered a stinker. Hopefully caused by issues peculiar to IAG rather than general market conditions.

https://www.smh.com.au/business/banking-and-finance/iag-profits-drop-70-percent-no-dividend-after-immensely-challenging-half-20200724-p55f1o.html

Boop boop de do
Marilyn

[Jaa]

Here's a report on IAG's NZ results which were also down, despite pocketing the bonus money from reduced car claims unlike Tower and AA.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12354499


Higher claims stemming from the Canterbury hailstorm and increased operating costs linked to closing its AMI offices has dragged down the profits of IAG New Zealand - the parent company for State and AMI.

The New Zealand arm of the ASX-listed IAG Group business reported an insurance profit of A$330 million ($357m) for the year to June 30 - a A$60 million drop on the previous year.

Also... Chch claims are far from over.... :scared:


It still had 900 claims open out of the more than 90,000 it received.

"Outstanding Canterbury earthquake claims include those subject to dispute and litigation, as well as recently received over-cap claims from the Earthquake Commission.

"It remains IAG's expectation that finalisations of all residual claims will take several years given associated complexity."

IAG's share price is at 5-8 year lows in Australia. Good news for Tower I guess, IAG won't be undercutting on price any time soon!

[Jaa]

Just checked Tower's other major competitor, Suncorp and it's share price has done even worse than IAG over 8 years. What a terrible time to be in insurance, made even worse considering the market bull run over the same time frame.

[winner69]

This is the guts of IAG problems (alongvwith credit markets)

"What we find historically and across the industry globally is that when we face into difficult economic times and when claims from prior years get re-valued, companies generally have to look at strengthening their reserves," said Mr Harmer,

I reckon that applies to Tower as well.

[Sgt Pepper]

Its a tough hold alright.

Is TWR still going to court? https://www.tower.co.nz/about-us/news/2020/tower-insurance-takes-eqc-to-court

Cant find anything on this on the interweb...

Resolution on this $80m claim on EQC is holding back the divis and a $1 share price....

How do you find out when court proceedings are due to be heard in court. Is there an accessible public list/date of pending cases in the High Court??

[nztx]

This is the guts of IAG problems (alongvwith credit markets)

"What we find historically and across the industry globally is that when we face into difficult economic times and when claims from prior years get re-valued, companies generally have to look at strengthening their reserves," said Mr Harmer,

I reckon that applies to Tower as well.


The movements in the Investment markets (Shares & Fixed Interest) wont be helping, with sort of portfolios many Insurers usually carry ..

[Independent Observer AUNZ]

The movements in the Investment markets (Shares & Fixed Interest) wont be helping, with sort of portfolios many Insurers usually carry ..

Tower invests very low risk (fixed interest) for over 99% of assets. Of course interest returns have been impacted heavily but not as bouncy/wobbly as equities markets. Source: Annual Report

[Traderx]

TWR starting to look pretty cheap. Hopeful of divi likely to be restarted. Opened small position

[tim23]

TWR starting to look pretty cheap. Hopeful of divi likely to be restarted. Opened small position

We nearly thought that last time...

[mike2020]

We nearly thought that last time...

I was trapped in the TWR caught by the credit raise then CVD19 after taking a position thinking a divi was due. Woe to all who enter the TWR

[nztx]

We nearly thought that last time...

Too true .. and what was it landed instead ? .. a Cap Raise for an acquisition instead ?

Or was it reserving funds to improve their online platform ?

Or was it Premium refunds to the fortunates on the business end of the deal ?

TWR seem to have rewarded every other sucker in queue first and their long neglected Shareholder contingent appear to
be last in queue.. heck even Policy holders through C-19 got millions repaid ahead in the pile ;)

TWR's treatment of their long suffering Shareholders does seem to be rather "Cheap & Nasty"

[Leemsip]

Half year results out in Oct. I expect another $14m post tax profit for the half taking the full year to around $30m (H1 NPAT was $15m). There will be some movement from Canty provisions, COVID premium givebacks, major disaster costs etc but I think $14m for H2 is a good ballpark.

Total company value is $240m so P/E on this is 8. Also growing gross premiums at 10% per year.

Hopefully we get a positive update on the EQC payout as this is the only thing stopping a dividend payout and a significant re-rate of this share.

Im getting tired of hearing myself say all of this year after year and not seeing it actually happen. :mad ;:

[Traderx]

Half year results out in Oct. I expect another $14m post tax profit for the half taking the full year to around $30m (H1 NPAT was $15m). There will be some movement from Canty provisions, COVID premium givebacks, major disaster costs etc but I think $14m for H2 is a good ballpark.

Total company value is $240m so P/E on this is 8. Also growing gross premiums at 10% per year.

Hopefully we get a positive update on the EQC payout as this is the only thing stopping a dividend payout and a significant re-rate of this share.

Im getting tired of hearing myself say all of this year after year and not seeing it actually happen. :mad ;:

Agree - on the customer side I like how they are moving towards full online/digital - if you do a dummy quote on Tower vs others etc you'll see the difference. As a Wellingtonian I detest/fear their risk based pricing approach, but I grudgingly accept that it is "fair" and any equalization/socialization should occur via govt - which it seems like it is with raised EQC cap etc.

[Filthy]

Hopefully we get a positive update on the EQC payout

Or just any sort of update...... even if its an update to say its still alive and progressing...... I suspect most of the market either doesn't know about it, forgotten it and/or is currently pricing the SP like it as a 0% chance of ever settling....

[winner69]

Half year results out in Oct. I expect another $14m post tax profit for the half taking the full year to around $30m (H1 NPAT was $15m). There will be some movement from Canty provisions, COVID premium givebacks, major disaster costs etc but I think $14m for H2 is a good ballpark.

Total company value is $240m so P/E on this is 8. Also growing gross premiums at 10% per year.

Hopefully we get a positive update on the EQC payout as this is the only thing stopping a dividend payout and a significant re-rate of this share.

Im getting tired of hearing myself say all of this year after year and not seeing it actually happen. :mad ;:

Probably a message in that statement bolded eh

[Marilyn Munroe]

Well I'm out. I expected the benign underwriting environment would result in a rerating of this share.

Knowing my luck sods law will apply and the share price will increase.

Boop boop de do
Marilyn

[Southern Lad]

TWR starting to look pretty cheap. Hopeful of divi likely to be restarted. Opened small position


See commentary below suggesting that the RBNZ is continuing with its stance that insurers are likely to be required to hold more capital and that until details are announced that the RBNZ would prefer that insurers don't pay dividends.

https://www.interest.co.nz/insurance/107043/rbnz-says-its-imprudent-insurers-pay-dividends-moment-announces-major-insurance

To be fair, this is the same message TWR gave in its half year results presentation. So prospects of a dividend anytime soon not that positive. Possibility also of a further capital raise also on the cards unless dispute over EQC receivable can be resold favorably and quickly.

[Leemsip]

All hinges on the EQC payout

I calced this last year. Tower should be well up to 180% solvency ratio by now.




Tower
IAG


Rough Solvency Ratio with Youi additions + cap raise
163%
163%



Rough Solvency assuming no EQC payout of $50m
119%




Sadly I agree they might need another cap raise if there is a rule change and they dont get the EQC payout.

[winner69]

Glad some Lake Oahu folk were insured ...though it must be hard for those who have lost a lot

https://www.nzx.com/announcements/361285

[winner69]

The way they say a big event is going to ‘impact’ profit by $x sort of suggests that they planned to have no big events.

Surely they plan/budget to have events as a matter of course

Or is this $5m to $7m they mention the bit that’s over the planned losses?

And they had no F21 forecast yet ..have they?

[Leemsip]

The way they say a big event is going to ‘impact’ profit by $x sort of suggests that they planned to have no big events.

Surely they plan/budget to have events as a matter of course

Or is this $5m to $7m they mention the bit that’s over the planned losses?

And they had no F21 forecast yet ..have they?

F@ck I hate this company.
Terribly low info in each update. Have they hit the re-insurance cap with just this fire or what? $7m is material to a company making $30m, what about some more details FFS.

Mustnt sell before the 6 months results are in..... I keep repeating that

[winner69]

F@ck I hate this company.
Terribly low info in each update. Have they hit the re-insurance cap with just this fire or what? $7m is material to a company making $30m, what about some more details FFS.

Mustnt sell before the 6 months results are in..... I keep repeating that

And new financial year just started ...not a good start eh

Betcha there a few more big events to come in F21 .....wonder how many more

[Marilyn Munroe]

The Ohau release is slightly misleading in my opinion.

A claim being made against an insurance company is not an unexpected event. When a policy is issued a portion of the premium is transferred to provisions where it is set aside to meet expected claims. While a provision is obviously not an an exact determination of future events a customers house burning down is not a surprise.

It is only when claims exceed provisions and overtop excessive loss reinsurance the profit and loss takes a a hit.

Boop boop de do
Marilyn

[winner69]

The Ohau release is slightly misleading in my opinion.

A claim being made against an insurance company is not an unexpected event. When a policy is issued a portion of the premium is transferred to provisions where it is set aside to meet expected claims. While a provision is obviously not an an exact determination of future events a customers house burning down is not a surprise.

It is only when claims exceed provisions and overtop excessive loss reinsurance the profit and loss takes a a hit.

Boop boop de do
Marilyn

So (as I sort of said) the Lake Ohau event claims are $5m to $7m higher than the provision set aside ...and will impact profit by this amount.

Suppose thats what they meant to so.

[Jaa]

The way they say a big event is going to ‘impact’ profit by $x sort of suggests that they planned to have no big events.

Surely they plan/budget to have events as a matter of course

Or is this $5m to $7m they mention the bit that’s over the planned losses?

And they had no F21 forecast yet ..have they?

They budget for two overcap insurance events a year. Overcap means more than $5m of losses, $5m being the limit before their reinsurance kicks in. Can't remember if this is before or after tax. Obviously if those events don't occur it is a bonus for the company. Still affects how much profit they make of course.

With house prices these days, $5m seems to only be 5-10 houses :ohmy:

[nztx]

The Christmas fairy remains locked in the Cupboard at TWR for long suffering Shareholders for yet another year ? ;)

Fairly sad state of affairs - isn't it ..

[Dlownz]

The Christmas fairy remains locked in the Cupboard at TWR for long suffering Shareholders for yet another year ? ;)

Fairly sad state of affairs - isn't it ..

If they hadn't paid back premiums for lockdown this would have equaled it

[Poet]

What a ridiculous announcement. Very poor first shareholder communication from new CEO who has now had his feet under the table for two months.
What exactly are they trying to say? Is the $5m to $7m the gross cost of the event, or something else?
Also, what exactly is going on with the EQC claim - no news for months - do we have a court date, are negotiations going on in the background.
I get the impression that the chair Michael Stiassny has, at some distant point in the past, had some success with litigation and now thinks that is the go to solution whenever there is a dispute - see how he dragged NZ Windfarms through litigation with palmy council and neighbours (re consents) for years before he was forced off the board so that a new board could negotiate a settlement - is this the way it needs to go with Tower?

[nztx]

Fairly good at spending Shareholder's Money on acquisitions, shoring up the camp & online platforms along the way

Perhaps very good 'Allrounders' on TWR Board rather than talent with long proven record of expertise in all things Insolvency could produce a far better results, increased shareholder confidence & following in the TWR Ship instead ? ;-)

Lets face it - recent fortunes have seen TWR's Hand out for Cap Raise(s), etc etc followed by a trail of disappointment for Shareholders & a langishing SP as a consequence of TWR's attempts at Empire Building and Improvements & shoring things up not delivering to date..

[winner69]

Fairly good at spending Shareholder's Money on acquisitions, shoring up the camp & online platforms along the way

Perhaps very good 'Allrounders' on TWR Board rather than talent with long proven record of expertise in all things Insolvency could produce a far better results, increased shareholder confidence & following in the TWR Ship instead ? ;-)

Lets face it - recent fortunes have seen TWR's Hand out for Cap Raise(s), etc etc followed by a trail of disappointment for Shareholders & a langishing SP as a consequence of TWR's attempts at Empire Building and Improvements & shoring things up not delivering to date..

You sound rather disillusioned nztx

Time to give them a miss?

[tim23]

Fairly good at spending Shareholder's Money on acquisitions, shoring up the camp & online platforms along the way

Perhaps very good 'Allrounders' on TWR Board rather than talent with long proven record of expertise in all things Insolvency could produce a far better results, increased shareholder confidence & following in the TWR Ship instead ? ;-)

Lets face it - recent fortunes have seen TWR's Hand out for Cap Raise(s), etc etc followed by a trail of disappointment for Shareholders & a langishing SP as a consequence of TWR's attempts at Empire Building and Improvements & shoring things up not delivering to date..

They have continued to disappoint - gee imagine if they still had funds management operation that they sold to Fisher.

[Sgt Pepper]

Glad I bailed out two years ago, patience is a virtue I know but does have its limit

[ados_nz]

https://www.stuff.co.nz/business/money/123090995/tower-gives-with-one-hand-but-takes-away-with-another-customer-says

[850man]

https://www.stuff.co.nz/business/money/123090995/tower-gives-with-one-hand-but-takes-away-with-another-customer-says

Tower called out for doing something that all the other major insurers also do (AA, AMI, State) :confused:

In reality, their premiums are very competitive, customer service is good, online platform is very good and that post Covid premium payback was above and beyond all the others. My only complaint is that the $7.5M of payback would have felt a lot better as a divvy for shareholders however that's not me looking at the longer term objective of that gesture now is it.

Disc: Customer with a small holding, still hopeful.

[Filthy]

Tower called out for doing something that all the other major insurers also do (AA, AMI, State) :confused:

In reality, their premiums are very competitive, customer service is good, online platform is very good and that post Covid premium payback was above and beyond all the others. My only complaint is that the $7.5M of payback would have felt a lot better as a divvy for shareholders however that's not me looking at the longer term objective of that gesture now is it.

Disc: Customer with a small holding, still hopeful.

I've forgotten what a TWR divvy even looks like 850!... haha
To be fair though, I actually think it (the premium refund) was the right thing to do. Loads of overseas insurers in the UK did the same, as did AA insurance here. Great way to make sure your customer base stays loyal.
I wish they had of used it more positively in a BIG marketing campaign though!! (which they may well have done, but I cant recall seeing anything??) - so a huge opportunity lost there.
Could have been really good leverage to steal some punters from competitors and further grow the customer base. If your going to be the good guy, make sure the world knows about it eh.

Very, very, disappointed we are not getting any updates on the EQC claim. Totally appreciate that they might not be able to comment on the process etc, but anything is better than nothing - even if it is just to say it is still ongoing, blah blah, and it is expected to conclude by 'X' date in 2049.... (which might not be too far off at this rate! - & the market agrees.... as it hasn't priced anything in!). I would be super happy just to get half of it or two-thirds back now (in a deal) rather than wait for a long legal battle to conclude virtually the same thing... less the expensive lawyers fees. The mind boggles.

[850man]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/361833/333360.pdf

9M or so shares hoovered up by a few companies over the last few months.

[winner69]

Hope Tower not exposed to many claims in Napier

Don’t really want to have another ‘event’

[Dlownz]

Hope Tower not exposed to many claims in Napier

Don’t really want to have another ‘event’
I live in Napier
Would you believe I had shares and sold them all as soon as I got home on the Monday as I saw the waters coming up.
Didn't want to risk it.
Not sure how many would have tower for insurance they are about 50 a month more expensive than state.

[hogie]

I live in Napier
Would you believe I had shares and sold them all as soon as I got home on the Monday as I saw the waters coming up.
Didn't want to risk it.
Not sure how many would have tower for insurance they are about 50 a month more expensive than state.

Napier is a high risk area and is priced accordingly ... hopefully that results in less customers in that area :)

[850man]

Doesn't Tower's FY end 30 Sept? If so numbers are all in before the Napier floods. One should hope though that they make allowance for some claims during the FY. What will be most interesting is how much of the money they are owed from EQC have they been able to get.

[seadog]

I live in Napier
Would you believe I had shares and sold them all as soon as I got home on the Monday as I saw the waters coming up.
Didn't want to risk it.
Not sure how many would have tower for insurance they are about 50 a month more expensive than state.

I also live in Napier and sold out the the Friday before the floods...just pure luck. Had held TWR for over a year I still believe they have potential just better options elsewhere.

I was at the local dump today and it was mobbed.... the claims will unfortunately be substantial, almost everybody has a story to tell. Civil defence and the authorities managed the situation very well.

[Poet]

I see that Suncorp has settled its outstanding claim with EQC relating to allocation of earthquake repairs. Suncorp was claiming $100m but settled to avoid expensive litigation. Amount of settlement is commercially sensitive.
Is Tower close to settlement? Will we hear at results time next week?
GLTAH

[Southern Lad]

The RBNZ has written to Insurers on 11 November advising of a relaxation on earlier guidance that they should not pay dividends until the economic impact of COVID-19 became clearer:

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Policy-development/Banks/Review-capital-adequacy-framework-for-registered-banks/Letter%20to%20insurers%20re%20Dividends.pdf?revisi on=f6db7d62-7ace-4b45-a083-6052f8b0a6d3&la=en (https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Policy-development/Banks/Review-capital-adequacy-framework-for-registered-banks/Letter%20to%20insurers%20re%20Dividends.pdf?revisi on=f6db7d62-7ace-4b45-a083-6052f8b0a6d3&la=en)

Does this improve the chances that TWR will finally announce a dividend when they release their annual results on 25 November? In the FY 20 half year profit announcement, the then RBNZ stance that Insurers should protect solvency positions and protect capital was cited as a reason why no interim dividend was declared.

The Lake Ohau fire and losses from the Napier weather event have hit post year end on 30 September, however if the costs to TWR are significant, this may persuade the Directors to be more cautious than they may have otherwise been. Guess we will know next week!

[nztx]

You sound rather disillusioned nztx

Time to give them a miss?

Forgive one for saying .. but it looks like I & others haven't missed out on anything much
in just over a month while busy elsewhere .. ;)

[mike2020]

Forgive one for saying .. but it looks like I & others haven't missed out on anything much
in just over a month while busy elsewhere .. ;)

Try 5 months. I was convinced a year ago there would be a settlement plus a div. They may pull one out of the bag this year but I am happy to watch the show from outside.

[Arbroath]

I see Suncorp has settled with EQC which is interesting. Details are commercially sensitive so we don't know what split they agreed but this has to be slightly good news for Tower as Suncorp have got a settlement without going to court. Will Tower announce a deal with EQC at their half year results?

[Scrunch]

I see Suncorp has settled with EQC which is interesting. Details are commercially sensitive so we don't know what split they agreed but this has to be slightly good news for Tower as Suncorp have got a settlement without going to court. Will Tower announce a deal with EQC at their half year results?

Only if they want to confirm they are non compliant with nzx listing rules. A settlement would be price sensitive information to be released straight away. At best there will be an update that its still in dispute.

[Balance]

https://www.afr.com/companies/financial-services/insurers-lose-covid-19-business-interruption-test-case-20201118-p56fr1

IAG found liable to pay for business interruption costs & losses due to Covid-19.

TWR offers business interruption insurance so could be impacted.

[aquaman]

https://www.afr.com/companies/financial-services/insurers-lose-covid-19-business-interruption-test-case-20201118-p56fr1

IAG found liable to pay for business interruption costs & losses due to Covid-19.

TWR offers business interruption insurance so could be impacted.


Lets hope this doesn't impact Tower here in NZ as IAG are taking this seriously, as they should. Australian ruling but one does wonder if this will open some doors for challenging claim outcomes here in NZ

IAG Group statement
"From a financial perspective, given the anticipated increase inbusiness interruption-related claims, we’ve announced today an estimatedpost-tax provision of approximately $865 million to cover pandemic relatedlosses. In response to this, we are undertaking a capital raising of up to $750million to help strengthen our balance sheet. This will be via a fullyunderwritten institutional placement of $650 million, and a non-underwrittenshare purchase plan up to $100 million for our retail shareholders.

[williethewaiter]

Lets hope this doesn't impact Tower here in NZ as IAG are taking this seriously, as they should. Australian ruling but one does wonder if this will open some doors for challenging claim outcomes here in NZ

IAG Group statement
"From a financial perspective, given the anticipated increase inbusiness interruption-related claims, we’ve announced today an estimatedpost-tax provision of approximately $865 million to cover pandemic relatedlosses. In response to this, we are undertaking a capital raising of up to $750million to help strengthen our balance sheet. This will be via a fullyunderwritten institutional placement of $650 million, and a non-underwrittenshare purchase plan up to $100 million for our retail shareholders.

response from IAG nz CEO "While the outcome was not what our colleagues in Australia were expecting, the case has no application to New Zealand. The wording of our policies in New Zealand are different. "

[aquaman]

Thats good news and hopefully same for Tower .Thanks for update

[Filthy]

https://www.nzx.com/announcements/363819 - finally settled!

[Filthy]

I would be super happy just to get half of it or two-thirds back now (in a deal) rather than wait for a long legal battle to conclude virtually the same thing...

Maybe they read my posts..... 76% back.
Not to bad. Could've been worse eh!

[Jaa]

That's only 76% of the already heavily written down amount though!

So yet another year ruined by a "one off" write down from the Christchurch earthquakes. $9.5m from net profit so more than that excluding the tax benefit.

Not really that impressive.

[nztx]

Still no Div likely ;)

Custies seem to be getting best end of the stick with Tower on all the feel good promo's
and Holders get ignored again & again & again (until TWR have need to come knocking for
another Cap Raise)

Not a Holder nor have been for some time - the future prospects based on past TWR track record
dont really inspire or excite either !

[Jaa]

Here is the numbers from the HY report relating to the EQC claimable. Amazing how TWR have got their risk margins wrong every single year since the earthquakes. :sleep:


EQC recovery receivable ($ thousands 31-Mar-20)

EQC related to closed claims 76,900
EQC related to open claims 1,300
Risk margin on EQC receivable (9,200)

Receivable from EQC 69,000

EQC payable to reinsurers on closed claims (17,000)
EQC payable to reinsurers on open claims (300)
Risk margin on EQC payable to reinsurers 2,300

EQC payable to reinsurers (15,000)


Receivable from EQC net of reinsurance 54,000

Actual amount recieved: $42.1m

[winner69]

Full year tomorrow ...intake it will be in $25m to $28m range

Guidance F21 could be interesting.

[Gerald]

“We now have a very strong capital position and will provide a further update in relation to dividend payments with our 2020 financial year results announcement tomorrow.”

Sounds encouraging, we could get a (tiny) 50% NPAT divi announced tomorrow considering profit will be lower from the writeoff and the 10.5-12.5m harold/timaru hailstorm expense.

Although wouldn't be suprised if they complain the RBNZ holding them back.

Just imagine if we had no dodgy weather for a year, Tower would be stacked :t_up:

[nztx]

“We now have a very strong capital position and will provide a further update in relation to dividend payments with our 2020 financial year results announcement tomorrow.”

Sounds encouraging, we could get a (tiny) 50% NPAT divi announced tomorrow considering profit will be lower from the writeoff and the 10.5-12.5m harold/timaru hailstorm expense.

Although wouldn't be suprised if they complain the RBNZ holding them back.

Just imagine if we had no dodgy weather for a year, Tower would be stacked :t_up:

In such a unique uneventful year, undoubtedly planning to stack some more unfortunate stakeholder loot
to bankroll a further acquisition that just mysteriously appeared out of nowhere could never be
discounted - rather than shelling out even a token dividend .. ;)

Just to show that no-one has fallen asleep at their desks in the TWR control towers .. ;)

[winner69]

Beat guidance

Should be good for the share price

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/363840/335912.pdf

[trader_jackson]

Beat guidance

Should be good for the share price

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/363840/335912.pdf

And a larger than expected pay day yesterday... great stuff all round!

[850man]

And a larger than expected pay day yesterday... great stuff all round!

The market is uninspired by it all - 5ish% SP drop today. I tend to agree with other's comments that Tower does not care about returning value to shareholders.

[percy]

The reason for the drop .
I brought a few at 62.5 cents at open.
All the talk of digital sales and claims got me excited..lol.

"Tower CEO Blair Turnbull, who joined the company in August 2020, says the company’s digital and data
strategy is a game changer and is laying the groundwork to fundamentally transform how we deliver
insurance in New Zealand and the Pacific."
“Digitisation allows Tower to reach customers in new and exciting ways. As a result of our simplified online
processes, two-thirds of new business is now coming through online channels and close to half of all claims
are being logged online. Less than a year ago we launched MyTower, a fully online sales and service portal,
and since then we’ve had over 50,000 people register. It’s this type of innovation that will set us apart,” says
Turnbull.

[nztx]

Indeed .. yet another exciting & rewarding experience for poor unfortunate holders of TWR contributory dreadfuls

NTA - Static
EPS - Down not quite half mast
DPS - All Zero's

Rewards all dished out to Policy Holders (all $7.2 mil of it)

Stakeholders once again get left hung out to dry another duration, it seems

No wonder the TWR SP always seems to head south fairly quickly

Discl: Not a Holder

[Scrunch]

Indeed .. yet another exciting & rewarding experience for poor unfortunate holders of TWR contributory dreadfuls

NTA - Static
EPS - Down not quite half mast
DPS - All Zero's

Rewards all dished out to Policy Holders (all $7.2 mil of it)

Stakeholders once again get left hung out to dry another duration, it seems

No wonder the TWR SP always seems to head south fairly quickly

Discl: Not a Holder

There is some useful strength in underlying metrics, but it is no surprise the market is applying a significant discount to the possible true value. This is most likely due to lack of confidence in managements ability to do their core job of estimating risks accurately. Going back to page 44 of the 2018 annual report page Tower estimated that the net EQC receivable was $52m and a risk margin of $10.1m had been allowed in this figure so something over $62m was expected. The 2019 accounts again had a net $53m so while a net $42.1m is good to see, it is $20m short of what was implied a couple of years ago.


The 2018 annual report indicated full provisioning for the Canterbury earthquakes with a $5m additional risk margin. Again on page 44: "...and the remaining $5.0m is expected to be released once the Canterbury Outstanding Claims Liability has sufficiently run off."
The Actual 2019 result included an additional net claims expense of $6.048m. This theoretically increased provisioning to 148% of likely expenses. Was this enough? No.
The 2020 result included additional provisioning with amounts of $2.4m and $2.7m referenced in different places. At least the $5m risk margin still exists.

But management then have the cheek to state "The Canterbury portfolio is performing in line with expectations in most areas. The after tax strengthening of $2.7m for FY20 represents the lowest annual increase since 2014".

If it was performing inline with expectations, the 2020 P&L would have had no incremental expense, and part of the $5m risk margin being credited back increasing the surplus. As I write this I'm not surprised the share price declined with the result.

[Poet]

So now it seems Tower's brilliant leadership team plans to use the excess funds to go shopping rather than returning it to shareholders. They raised the $47 odd million last year from shareholders to prop up their capital adequacy because the reserve bank wouldn't accept the (then) EQC receivable as part of their capital adequacy. Now they have finally go their hands on the EQC money (albeit somewhat diminished) they don't think that they are obliged to give it back to shareholders, instead they look around for some other way they can spend it - jeez, what a crew!
Do they look at the share price performance and pat themselves on the back, telling themselves that their shareholders are happy with their strategy? What world do they live in.
And don't get me started on the return of premiums re covid lockdown.
These people don't need to be buying other insurance books, they need to be bought themselves and maybe then their long-suffering shareholders can be put out of their misery

[winner69]

So now it seems Tower's brilliant leadership team plans to use the excess funds to go shopping rather than returning it to shareholders. They raised the $47 odd million last year from shareholders to prop up their capital adequacy because the reserve bank wouldn't accept the (then) EQC receivable as part of their capital adequacy. Now they have finally go their hands on the EQC money (albeit somewhat diminished) they don't think that they are obliged to give it back to shareholders, instead they look around for some other way they can spend it - jeez, what a crew!
Do they look at the share price performance and pat themselves on the back, telling themselves that their shareholders are happy with their strategy? What world do they live in.
And don't get me started on the return of premiums re covid lockdown.
These people don't need to be buying other insurance books, they need to be bought themselves and maybe then their long-suffering shareholders can be put out of their misery

Sounds like you a bit unhappy - why remain a shareholder if things are so bleak

[winner69]

Love the way they say underlying profit excluding large events increased 23% on the prior year to $34.7m,

Tower like all insurers use the old its climate change trick when they talk about 'large events'

They only getting their comeuppance - or whoever paying them back (penalising them) for the all the years insurance companies propped up the oil and mining industries by 'investing' their vast amount of premiums in such dirty industries

Some might say karma

[Antipodean]

One thing that should not be underestimated - the successful transformation of the legacy IT systems (and the massive expenditure on this), is going to be very advantageous over the coming years.
Tower have not only essentially completed the replacement and move, also migrated their own book plus another insurers book into this system in quick succession.
These types of projects not only usually have a high failure rate, they often don't move anywhere near as quickly.

Reaching a settlement with EQC, alongside the new agreement going forward for future events, will reduce the issues encountered with CHCH that are still ongoing.
It is less than 100% sure, but as others have noted better than further years of litigation and uncertainty.

I believe the idea behind excluding large events was to enable more reasonable year to year comparisons. This is based on the idea that large events don't happen with the same frequency or impact in every year. Not sure how true that is these days but it stands.

The wording around the dividend resumption would have been better received if acquisitions wasn't mentioned. Understand the general market conditions wording makes sense.
Dividend stream has been dry since 2016. Looking back prior to those days dividend stream was 6-10c per year so maintaining the cost control and bringing back even a part of that would reassure.
I couldn't find a stated dividend policy?
Regardless of how FY21 goes, this is more of a FY22 story if you have the patience.

The covid premium refund is a tricky area. Insurers do offer discounts for low usage of vehicles, as this reduces risk. So this could be similar.
Claims massively dropped for all the industry players.
Insurance is an industry that operates under the idea of utmost good faith, so hopefully this gesture is seen well by customers in years to come.
General insurance is a product that is very easy to switch and compare at the moment so goodwill is valuable.

[winner69]

Antipodean said - I believe the idea behind excluding large events was to enable more reasonable year to year comparisons.

I believe so

Bit like casinos often ‘normalise’ profits by using expected returns from the high rollers.

Some years the big guys beat the house and some years the house does well ...but casino provides a profit number that gives reasonable comparatives year by year

Spose insurance is a bit like a casino ..place your byes and hooe for the best

[nztx]

But do they exclude the premium & investment income also - generated off years of covering
Larger more extreme events - levied at presumably the appropriate costed risk rate ?

It seems like more TWR Insurance gibberish & BS to cover their Asses IMO

(ie: just a further bundle of Accounting Window dressing from the TWR Dividend shirkers)

How many normal years would they have where there was only the likes of a heirem of TWR Insured Joe Bloggs's
making claims for hitting their Letterboxes and like minor claims ? ;)

[Jaa]

Love the way they say underlying profit excluding large events increased 23% on the prior year to $34.7m,

Tower like all insurers use the old its climate change trick when they talk about 'large events'

They only getting their comeuppance - or whoever paying them back (penalising them) for the all the years insurance companies propped up the oil and mining industries by 'investing' their vast amount of premiums in such dirty industries

Some might say karma

Nice story... but TWR invests in bonds and mostly government and bank bonds at that. From the HY report:


Tower has a low risk tolerance and therefore the majority of its investments are in investment grade supranational and bank bonds.

Insurers have done more than most in signalling the future costs and risks of climate change. Not least via their risk adjusted premiums on things like beachfront properties.

[percy]

Pleasing seeing the chairman brought 200,000 shares at 60 cents increasing his holding.
Old saying says plenty of reasons directors sell shares, but only one reason they buy them.

[JohnnyTheHorse]

He potentially bought more today too Percy. The depth was extremely weak and yet someone just hit the ask for 100k+ shares. Looked more like someone trying to help the share price than get the best entry price!

[850man]

Pleasing seeing the chairman brought 200,000 shares at 60 cents increasing his holding.
Old saying says plenty of reasons directors sell shares, but only one reason they buy them.

Certainly a positive sign compared to Directors selling up.

[Scrunch]

He potentially bought more today too Percy. The depth was extremely weak and yet someone just hit the ask for 100k+ shares. Looked more like someone trying to help the share price than get the best entry price!

Looking back into the announcement history for Michael Stiassny:
5Feb2014 - Initial disclosure of 82,335 shares
2May2016 - Acquired 397 shares from estate
7Dec2017 - Acquired 80,000 on-market @ 62.6c ave
14Dec2017- Acquired 150,000 on-market @ 68.3c ave
20Dec2017 - Took up 42c rights + 82,732 shares
23Oct2019 - Took up 56c rights + 98,866 shares
26Nov2020 - Acquired 200,000 on-market @ 60.0c ave

Current new holding 694,330. This is the largest purchase to date, and also the first on-market purchase in over 3 years. I'd agree with JohnnyTheHorse that there's a good chance this wasn't just a 200k purchase but nearer 400k including the circa 200k bought at just before mid-day on the 30th. The on-going disclosure notice was filed at 3.17pm on the 30th.

Also is that the 30day MA just crossing the 100day MA (directbroking chart)?

[Poet]

Pleasing seeing the chairman brought 200,000 shares at 60 cents increasing his holding.
Old saying says plenty of reasons directors sell shares, but only one reason they buy them.

A good price too, good for him!

[JohnnyTheHorse]

CEO and a Director have also taken reasonable sized positions post announcement. I'm still expecting a further update from yesterdays acquisition not covered by the disclosure notices so far.

1 million share also just crossed at 61.

https://www.nzx.com/announcements/364276

Disc: trading position.

[nztx]

A good price too, good for him!



Nice to see the CHAIR developing a taste for Non Dividend Paying Shares in his favourite company .. ;)

Hope he enjoy the investing experience .. ;)

[JohnnyTheHorse]

Huge volume crossing at ever higher prices...

[winner69]

Just over $500 to insure you boat seems reasonable

Another few mill to the bottom line ...cool

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/364421/336707.pdf

[Poet]

Bought a bolt-on already. A bit hard for us to know whether this is good or bad without disclosure of how much they paid.

https://www.nzx.com/companies/TWR/announcements

[Scrunch]

Bought a bolt-on already. A bit hard for us to know whether this is good or bad without disclosure of how much they paid.

https://www.nzx.com/companies/TWR/announcements

My reading was that the cost is some sort of ongoing referral fee to Club Marine. No cash upfront. Its unclear if this referral fee is one-off as customers sign up or ongoing like banks ongoing payments to mortgage brokers. Either way it should be factored into the pricing to make it profitable business for Tower.

[850man]

Some decent volume trades today and up another cent...:ohmy:

[JohnnyTheHorse]

Chairman & CEO buying in big, large crossings happening each day at higher price each day... Am expecting this to finally get a 'Covid bounce' back to the 75-80c range.

[Antipodean]

My reading was that the cost is some sort of ongoing referral fee to Club Marine. No cash upfront. Its unclear if this referral fee is one-off as customers sign up or ongoing like banks ongoing payments to mortgage brokers. Either way it should be factored into the pricing to make it profitable business for Tower.

General insurance referral costs are typically one off, as each renewed (usually 12 month period) contract is effectively a separate product with potentially all new terms and conditions.
Quite different to life insurance with long trailing annual fees until the life insured cover contract is terminated.

If I had to guess it would be a simple per policy cut ($ or %) of the first years premium.

[Jim]

I received an email from Tower that I can get a discount of $50 on your insurance premium, but there is for new sign up.

[trader_jackson]

Certainly been some interesting trading lately... take over offer coming? I'd probably take $1.50+ if so.

[JohnnyTheHorse]

Certainly been some interesting trading lately... take over offer coming? I'd probably take $1.50+ if so.

Highest weekly volume in 2.5 years so is very very notable. Latest crossings were at 66c so I see that as the new floor price. When you see crossing each day at higher and higher prices on massive bull volume you know this has momentum and will likely keep going. It's looking like it'll break the resistance zone of 66.5c. Next major resistance area after that is 75-80c.

[JohnnyTheHorse]

And another director has picked up an extra 100,000 shares...

https://www.nzx.com/announcements/364511

[sb9]

And another director has picked up an extra 100,000 shares...

https://www.nzx.com/announcements/364511

Interesting to note, on the notice it says price paid was 62c a piece with transaction date being 4th Dec, don't think it traded at that level today at all...

[Scrunch]

Interesting to note, on the notice it says price paid was 62c a piece with transaction date being 4th Dec, don't think it traded at that level today at all...

And strangely quick to complete the paperwork, normally there is a couple of day delay between the transaction date and notification of the purchase (or sale).

[JohnnyTheHorse]

Certainly been some interesting trading lately... take over offer coming? I'd probably take $1.50+ if so.

Bain Capital is still holding their 19.99% stake, so in my view some form of takeover is inevitable at some point. The question is whether Bain see value in PE control, or whether they are shopping it around for a sale. Maybe with the EQC issue finally sorted the platform is set?