Tower Limited (NZX: TWR) Tower Insurance Updates Guidance

Monday 17th May 2021

Tower Limited has today revised its guidance on underlying profit for the 2021 financial year.

The company now expects underlying net profit after tax (NPAT) of $25 million to $27 million for the year ended 30 September 2021. The previously announced guidance was for underlying NPAT of greater than $29.8 million.

In addition to higher frequency of house claims, this revision reflects emerging industry trends relating to inflationary pressures on building costs. Growth in Gross Written Premium (GWP) is forecast to be 5% or greater, despite declining GWP in the Pacific business due to Covid-19. Tower also expects continuing improvement in its management expense ratio.

Higher claims costs are largely being driven by an increased frequency of large house claims (claims totalling more than $50,000), with Tower accepting 52 large house claims totalling $9m in the first half. This compares to 26 large house claims worth $4.9m in the corresponding period of FY20. Tower has also noted emerging house claims inflation across the portfolio.

The low interest rate environment is impacting investment income, with $0.6m income in the first half of 2021 compared with $2.2m in the corresponding period of 2020. Tower remains committed to its dividend policy of paying 60% to 80% of cash earnings where it is prudent to do so. Accordingly, the Board anticipates declaring an interim dividend of 2.5 cents per share next week.

Please see the link below for details

Tower Insurance Updates Guidance

Source: Tower Limited

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