TWR - Tower Insurance.

[Jaa]

Great to see an experienced tech executive and entrepreneur, Geradine McBride added to Tower's board. Much better than the endless accountants and lawyers most NZ companies seem to prefer as directors.

Tower has leaned heavily into tech and ai in what is always a tech and data heavy industry. Her counsel I imagine will be very valuable.

[mistaTea]

Great to see an experienced tech executive and entrepreneur, Geradine McBride added to Tower's board. Much better than the endless accountants and lawyers most NZ companies seem to prefer as directors.

Tower has leaned heavily into tech and ai in what is always a tech and data heavy industry. Her counsel I imagine will be very valuable.

Oh yes, very fortunate.

Just look how well Sky TV has done.

[Poet]

Oh yes, very fortunate.

Just look how well Sky TV has done.

Yes, exactly. Presumably she participated in the debacle that was the SKY / media works dalliance - I've yet to see any board accountability for that sh!t show. Yet, here she goes with a lovely new sinecure to fill the coffers. I can hardly contain my excitement

[Jaa]

Yes, exactly. Presumably she participated in the debacle that was the SKY / media works dalliance - I've yet to see any board accountability for that sh!t show. Yet, here she goes with a lovely new sinecure to fill the coffers. I can hardly contain my excitement

Sky TV may not have done well but Fisher & Paykel Healthcare certainly has, whose board she also joined in 2013. Both sources of valuable experience I would imagine.

How responsible is a single director for any particular decision anyway? An endless debate that one.

[Gerald]

Oh yes, very fortunate.

Just look how well Sky TV has done.

Shhh. If we're lucky the increasing female representation on the board should tick some ESG box somewhere and we might get some of those golden ESG dollars headed our way.

[ronaldson]

Tower has announced its reinsurance program for the year commencing 1 October 2022. Catastrophe cover has gone to $934m (was $873m) with $11.8m excess (was $11.25m), but no aggregate cover has been purchased so potential exposure to multiple large event losses? The large event budget (like self-insuring) has gone from $20m to $30m. Overall the cost of reinsurance to premiums seems to have reduced from 14.3% to 13.6% so higher profit potential but more risk exposure?

The EQC cap for natural disaster cover for residential buildings rises from $150k to $300k for policies commencing on and after 1 October so for Tower the level of risk exposure will roll off progressively throughout the year as policies renew/new policies are entered into, albeit a higher proportion of premiums received will be due to EQC.

Another year of changing profile to come. Good to get to the end of the current financial year today and the annual result will be interesting. The Nelson floods have exhausted the $20m large event budget for FY 22 but guidance had allowed for that.

[ronaldson]

And now TWR has reported acquisition of the Kiwibank portfolio (underwritten by Tower) for $5.9m and will migrate the policies to the Tower Direct platform. The announcement notes that since February 2021 TWR has purchased books from ANZ, Westpac, TSB and Kiwibank for an aggregate $26m, eliminating commission paid to those partners of around $11m per annum. Hard to fault that in a financial sense, and in principle a good use of excess capital.

Settlement expected on 1 December so the transaction falls outside the year ended 30 September 2022. Similarly, the settlement of the transaction divesting TWR's interest in its Papua New Guinea subsidiary first advised in June but not updated subsequently as to progress.

I still say this Company is executing incrementally in a positive fashion, underpinned market leading IT, and is getting tidier in structure and leaving the CHCH earthquake history in the rear-view mirror. So FY23 should be good absent too many large events, or a really major catastrophe.

[Jaa]

Acquiring the banks books has been forced on Tower to get out of a technological dead end, turn off their old systems saving cost and give those customers a better experience on Tower Direct.

My concern is where will Kiwibank send their new customers wanting insurance? Tower has no new progressive partnerships with any major bank. Just TradeMe Insurance, TSB, Ray White, NZ Financial Services Group and NZ Defence Force.

Definitely a loss of distribution compared to ANZ, Westpac, TSB and Kiwibank. Assume Tower has calculated that consumers increasingly prefer to find their own insurance online and the $11m of commission paid to the banks for referring customers was not worth it. Could work if Tower shares some of the savings with Tower Direct customers.

[Sideshow Bob]

https://www.nzx.com/announcements/400631

Kiwi insurer Tower (NZX/ASX: TWR) has updated its earnings guidance for the year to 30 September 2022.

Based on preliminary and unaudited results, Tower anticipates underlying net profit after tax (NPAT), including large events, will be around $26m, up from a range of $21m-$25m. Underlying NPAT excluding large events ($14m after tax) is expected to be around $40m, above the previously advised range of $35.4m to $39.4m.

This increase to underlying NPAT follows continued growth in gross written premiums (GWP), reflecting rate increases and organic growth from existing and new customers, stronger retention, as well as disciplined management of claims and operating costs.

Unaudited GWP has increased 13% to $457m during the 2022 financial year, compared to the prior
year. Customer numbers have grown 4% to 317,000 from 304,000.

Reported profit will be impacted by additional strengthening of the residual Canterbury earthquake provision, due to factors including inflationary impacts and the receipt of new claims. There will also be a one-off provision of around $3m after tax for customer remediation arising from an error in the calculation of multi-policy discounts. Tower is in the process of identifying affected customers and determining refunds.

Dividend guidance remains at 5.5c per share over the full year, in line with Tower’s dividend policy.

[trader_jackson]

quite positive really as some were thinking their would be a downgrade, not an upgrade! Not just the bottom line doing okay, top line growth (GWP and customer growth) fairly impressive too.