Tower (ASX:TWR) shareholders heard a wide-ranging update at the insurer’s annual shareholders meeting, with outgoing chair Michael Stiassny describing FY2025 as an “exceptional year,” while also cautioning that results benefited from unusually low large-event claims and underutilization of the company’s large events allowance.
Management and the board also outlined early FY2026 trading, reiterated earnings guidance, and discussed the company’s approach to risk-based pricing, digital investment, climate resilience, and reinsurance protections.
Chair highlights FY2025 return of capital and dividend, with a warning on large events
However, he stressed the dividend reflected underlying profit that was “considerably boosted” by underutilization of Tower’s NZD 50 million large events allowance, adding that the benign experience of the past two years would not last indefinitely. Stiassny said Tower’s focus remains on controllable levers such as digital platform investment, disciplined underwriting, product innovation, and using technology and data to drive performance.
He also pointed to Tower’s address-level risk-based pricing and partnerships including Trade Me, Kiwibank, and Westpac (from mid-year), alongside a refreshed brand campaign, as elements positioning the business for the future.
Climate change and affordability: critique of slow national action and reporting burden
Stiassny devoted a significant portion of remarks to climate risk, arguing extreme weather is already costing lives and money and that national progress on adaptation has been “haphazard, inadequate, and painfully slow.” He called for better use of granular risk data, saying insurers and government already have the information and that it needs to become a “single source of truth.” He acknowledged that, if widely adopted, this could reduce Tower’s competitive edge from sharing risk information directly with customers, but said competition would then shift to service and price.
At the same time, he criticized the cost and effort devoted to climate statements, suggesting the resources could be better spent on practical resilience measures such as building a database and funding adaptation. He cited Financial Markets Authority indicative data that, under Australia’s new climate reporting threshold, only 11 of 164 New Zealand climate reporting entities would be required to disclose, and noted New Zealand’s planned increase to the market capitalization threshold would reduce reporting entities to around 76 from 164.
Stiassny also addressed the government’s insurance affordability review. He said Tower is cooperating, but argued premium inflation claims are overstated. He cited comparisons from FY2024 to FY2025 showing Tower’s average sum insured for contents increased 1%-1.5% while the average premium dropped 6%-8%, and said motor renewals in 2025 saw reductions peaking at 14%. He added that house premiums peaked at a 4% increase early in FY2025 but “dropped into negative territory since September.” He argued affordability pressure is primarily a cost-of-living issue and noted that ACC and Natural Hazards Insurance levies make up roughly 40%-43% of insurance premiums.
CEO outlines FY2025 record underlying profit and FY2026 guidance
Chief executive Paul Johnston recapped the company’s “Horizon One” and “Horizon Two” strategy phases, saying FY2024 and FY2025 focused on strengthening foundations and investing in technology, while the current phase is aimed at innovation and transformation to accelerate growth.
For the year ended 30 September 2025, Johnston reported:
- Gross written premium (GWP) increased to NZD 600 million.
- Customer numbers grew to 318,000.
- Record underlying profit after tax of NZD 107.2 million; reported profit of NZD 83.7 million.
- Total FY2025 dividend of NZD 0.245 per share and NZD 45 million of capital returned to shareholders.
He said large event claims were NZD 7.2 million, well below the long-term average, and that relatively benign weather moderated the business-as-usual (BAU) claims ratio. He also said inflation returned to historical levels, motor theft frequency normalized after actions to reduce exposure to high-theft vehicles, and that lower investment income reflected OCR reductions.
Johnston reiterated FY2026 guidance for underlying NPAT (excluding large events) of NZD 87 million to NZD 97 million, assuming a soft rating cycle continues and BAU claims ratios begin normalizing.
Early FY2026: growth, claims, large events, and solvency
Providing an update for the first four months of FY2026 (unaudited management accounts as at 31 January 2026), Johnston said policy numbers were up 5% versus January last year, led by a 10% increase in house policies, alongside 6% growth in contents and 2% in motor. GWP rose 2% to NZD 204 million for the four months. Tower added 12,000 new customers in the year to 31 January, taking total customers to 323,000.
He said the BAU claims ratio was 43% in the first four months, compared with long-run averages of 48%-50%, and that it is expected to increase but remain below the long-term average this financial year. Tower recorded three large events totaling an estimated NZD 12.1 million (October windstorm, Timaru hailstorm in November, and late January nationwide storm). The company has a NZD 45 million large events allowance for FY2026, leaving NZD 32.9 million available for the remaining eight months at that point. Johnston said claims from stormy weather “across New Zealand over the past few days” were still being assessed and were expected to exceed the NZD 2 million large event threshold.
He also highlighted customer and operational metrics, including an increase in net promoter score to +52 from +44 in September, and said Amazon Connect reduced overall call times by about two minutes. The management expense ratio was 31% for the period, and Tower’s solvency ratio was 160% as of 31 January 2026, up from 143% at 30 September 2025. Tower reiterated it holds an A-minus financial strength rating.
Governance items and reinsurance discussion
Shareholders considered three resolutions: authorizing the board to determine auditor remuneration (with PwC automatically reappointed), and the re-elections of directors Geraldine McBride and Naomi Ballantyne. Stiassny said the board supports lead audit partner rotation every five years and an audit firm tender at least every 10 years, noting a tender process was conducted in FY2025 with four audit firm proposals, after which the board retained PwC.
In Q&A, Tower executives explained the NZD 2 million threshold used to classify a “large event,” and discussed reinsurance protections. Interim CFO Angus Shelton said Tower has catastrophe reinsurance cover for events tipping over NZD 20 million, up to NZD 915 million, and said the company was confident it had appropriate reinsurance supported by modelling and stress testing. Shelton also said the reinsurance prudence level is set at a one-in-1,000-year event.
Management also confirmed Tower employs about 900 full-time equivalent staff and reiterated its dividend policy of paying 60%-80% of adjusted earnings, subject to maintaining a prudent capital position.
About Tower (ASX:TWR)
Tower Limited provides general insurance products in New Zealand and the Pacific Islands. Its insurance products include car, house, contents, contract works and renovation cover, landlord, boat, business, travel, pet, renters, house and contents bundle, electric vehicle, motorbike and motorcycle, lifestyle block, caravan or trailer, motorhome, campervan and RV, and multi-policy discount insurance. Tower Limited was founded in 1869 and is headquartered in Auckland, New Zealand.
