Kiwi insurer Tower has updated its earnings guidance on underlying net profit after tax (NPAT) for the year ending September 30, 2024 to be at the upper end of or exceed the previously advised range of between $22 million and $27 million.
This assumes full utilisation of a large events allowance which has conservatively been set at $45 million, the insurer noted.
The insurer said that the increased expectation for underlying NPAT guidance follows strong trading results for the first four months of the financial year, including positive GWP growth and a better-than-expected claims performance as the frequency of motor claims has begun to normalise.
Accordingly, Tower expects underlying NPAT will be at the top end or exceed its gross written premium (GWP) and combined operating ratio (COR) guidance ranges over the FY24 year.
No large events were recorded in the four-month period, as at January 31, 2024.
Tower will provide further details on its performance at its annual shareholder meeting on February 21, 2024.
In late September, the insurer completed the renewal of its reinsurance programme for the 2024 financial year, decreasing its catastrophe upper limit to $750 million.
Together with its existing multi-year placements, the new cover results in a reinsurance increased to $16.9 million for the first two events in FY24, up from $11.9 million in FY23. An excess of $20 million applies for a third event in FY24.
Tower said that it will pay 13.9% of total income for its reinsurance cover in FY24, which is down on the 15.7% a year earlier, including back up cover. Excluding back up cover, reinsurance costs were 12.3% of total income in FY23.
