TOWER LIMITED For personal use only
For personal use only
Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Market Information | Company Announcements Office |
NZX Limited | ASX Limited |
Level 1, NZX Centre | Exchange Centre |
11 Cable Street | Level 6, 20 Bridge Street |
Wellington | Sydney NSW 2000 |
New Zealand | Australia |
24 November, 2021
Tower announces FY21 result, dividend and proposed capital return
Kiwi insurer, Tower Limited (NZX/ASX:TWR) has today reported full year profit of $19.3m, up 72% from $11.2m at the full year 2020. Underlying profit including large events was $20.8m, compared to $28.4m in the prior year.
The Board has declared a final dividend of 2.5 cents per share, bringing total dividends for FY21 to 5 cents per share. As at 30 September Tower New Zealand Parent's solvency ratio was 271% and the company was holding $56.6m above its target solvency margin. Considering current opportunities and the company's capital position, the Board has proposed the return of $30.4m excess capital to shareholders by way of a compulsory share buyback*.
Summary of key results:
- Reported profit including large events $19.3m vs $11.2m in FY20
- Underlying NPAT including large events $20.8m vs $28.4m in FY20
- Gross written premium (GWP) $404m, up 5% on FY20
- Customer numbers increased 5% to 304,000, market share up to 9.2%
- Management expense ratio (MER) improved to 37% vs 39% in FY20
- Combined operating ratio (COR) 91.4%, increased 2.7%
Tower CEO Blair Turnbull said the full year result reflected challenging external factors first signalled at the half year. These included an increase in large events and large house claims, Covid- related claims costs inflation, and lower investment income.
"Tower has navigated a difficult year. Our focus has been on addressing a range of external challenges, while supporting our customers and delivering on our technology and distribution growth strategies," said Mr Turnbull.
FY21 large events comprised a $13.9m impact up from $9.7m in the prior year and included the large fire at Lake Ōhau and severe floods in Napier in late 2020, and Westport flooding in July. The frequency of large house claims, predominantly driven by house fires, continued to increase in the second half rising 61% over the year to 92, totaling approximately $21.1m. Inflationary pressures also continued to challenge claims costs which increased $17.1m in total to $166.8m, while net investment income reduced by $5.1m to $0.2m for the year.
Tower is responding to climate change risks and market challenges with rating and underwriting actions that will continue to ensure a strong and stable insurance business. In August Tower changed the full replacement fire benefit in its house insurance policies to an extended sum insured offering. Earlier this month, Tower announced the extension of its risk-based pricing strategy to include flooding with the aim of assisting customers to better understand their risks and insurance premiums while more accurately matching insurance pricing to risks. Tower believes this a fairer and more transparent way of pricing insurance which will also further strengthen the company's financial resilience.
* Under a Court Scheme of Arrangement. Subject to necessary approvals.
For personal use only
Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Prudent cost control and improved efficiencies saw Tower's overall MER improve to 37% versus 39% in FY20. These efficiency improvements were achieved while continuing to invest in Tower's flagship My Tower digital and data platform, which has now reached 132,000 registrations, over double this time last year.
Mr Turnbull says, "Tower's focus on simple and rewarding customer experiences combined with our digital and data capability have contributed to good growth, particularly in New Zealand where we saw a 7.9% premium increase to $350m. As part of our focus on developing deeper customer relationships we have enhanced our customer experience, introduced new products and automated our marketing delivery.
"We were particularly pleased to see Tower's leading motor product win two Canstar awards in 2021 - the top Car Insurer of the Year Award, and also an Outstanding Value Award alongside our partner brand Trade Me.
"Tower ends the year in a strong position to continue delivering sustainable earnings, dividends and premium growth.
"Transforming the customer experience lies at the heart of this strategy. In the year ahead Tower will continue to build customer relationships through leading partnerships and a richer product set. In 2022, Tower will be offering a world class digital experience on one core leading platform for all our personal lines customers across New Zealand and the Pacific," says Mr Turnbull.
ENDS
This announcement has been authorised by the Tower Board.
TOWER
Blair Turnbull
Chief Executive Officer
Tower Limited
ARBN 088 481 234 Incorporated in New Zealand
For media enquiries, please contact in the first instance:
Emily Davies
Head of Corporate Affairs and Reputation
Tower Limited
Mobile: +64 21 815 149
Email: emily.davies@tower.co.nz
Results for announcement to the market | |||||||||
only | Name of issuer | Tower Limited | |||||||
Reporting Period | 12 months to 30 September 2021 | ||||||||
Previous Reporting Period | 12 months to 30 September 2020 | ||||||||
Currency | NZD | ||||||||
Amount (000s) | Percentage change | ||||||||
Revenue from continuing | $428,205 | 4% | |||||||
operations | |||||||||
use | Total Revenue | $428,205 | 4% | ||||||
Net profit/(loss) from | $18,683 | 74% | |||||||
continuing operations | |||||||||
Total net profit/(loss) | $18,683 | 74% | |||||||
Interim/Final Dividend | |||||||||
Amount per Quoted Equity | 2.5 cents | ||||||||
personal | Security | ||||||||
Imputed amount per Quoted | N/A | ||||||||
Equity Security | |||||||||
Record Date | 19 January 2022 | ||||||||
Dividend Payment Date | 2 February 2022 | ||||||||
Current period | Prior comparable period | ||||||||
Net tangible assets per | $ 0.57 | $ 0.56 | |||||||
Quoted Equity Security | |||||||||
A brief explanation of any of | Revenues increased 4% year-on-year through a balanced mix of | ||||||||
the figures above necessary | premium rating increases and attracting new customers to Tower, | ||||||||
to enable the figures to be | partly offset by lower investment revenue. | ||||||||
understood | Net profit increased by 74% year-on-year, primarily due to the | ||||||||
prior year being impacted by the impairment of a receivable from | |||||||||
the EQC. The comparative period has been restated due to the | |||||||||
retrospective application of the change in accounting policy for | |||||||||
For | software-as-a-service assets. | ||||||||
Please refer to the 2021 annual results presentation for further | |||||||||
information. | |||||||||
Authority for this announcement | |||||||||
Name of person authorised | Hannah Snelling, Company Secretary | ||||||||
to make this announcement | |||||||||
Contact person for this | Emily Davies, Head of Corporate Affairs and Reputation | ||||||||
announcement | |||||||||
Contact phone number | +64 21 815 149 | ||||||||
Contact email address | emily.davies@tower.co.nz | ||||||||
Date of release through MAP | 24 November 2021 | ||||||||
Audited financial statements accompany this announcement.
onlyuse
personalTower Limited
Consolidated financial statements
for the year ended 30 September 2021 For
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Tower Limited published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 20:49:05 UTC.
