28 Nov 2018

Tower Insurance makes $6.7m full-year loss

1:30 pm on 28 November 2018

Tower has made a full year loss, despite continued strong growth, lower costs and improved sales, as the insurer continues to restructure and upgrade its technology.

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The Tower Insurance building in Auckland. Photo: Google Maps

The insurance company made a net loss of $6.7 million in the year ended September, which was $1.3m up on last year's $8m loss.

The result reflected a net $16.2m impact from the settlement of Peak Re, $11m from weather and large events and a net $3.6m adjustment to Canterbury earthquake provisions.

"While it offsets our growth, the resolution of the Peak Re dispute is a positive step forward, and the short-term challenges we've seen in claims have been addressed through pricing and underwriting responses," chief executive Richard Harding said.

"We are now building on this positive momentum and expect to see strong growth continue over the coming year as we keep transforming our business."

The company's gross written premium was up $23.7m to $336.1m over the prior year, with a 45 percent rise in new online business sales - a 10 percent improvement on 2016's online business.

In addition, it said there had been a slight decrease in management expenses, and its major technology upgrade was progressing well, with costs tracking to expectations.

"Combined with the successful delivery of our new IT platform in the coming year, we are well placed to continue challenging the market and offering customers a genuinely different option when it comes to insurance."

He said Tower was expected to make a full year underlying net profit in excess of $22m in the coming year.

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