Tower records leap in after-tax profit, insurer targets ‘low risk’ homeowners for growth
Thursday, 27 November 2025
NZX-listed insurer Tower has reported a large jump in after tax profits saying it was the result of lower-than expected bad weather claims.
In its 2025 financial year ending in September, Tower made an after-tax profit of $83.7 million, up from $74.3m the previous year.
Tower chief executive Paul Johnston called the profit an exceptional result.
However, he told shareholders: “It is worth noting that we expect conditions that influenced the [financial year 2024] and [financial year 2025] results, such as relatively benign weather, and prior-year rating flowing through the portfolio, to normalise in the coming year.”
Read more:
Tower also grew its customer base, with an 11% increase in house insurance policy customers, taking total customer numbers to 318,000.
The result comes as households remain under cost-of-living pressures, with insurance premiums under the spotlight.
Speaking in early November to insurers at Auckland’s upmarket Northern Club Climate Minister Simon Watts said in the last five years dwelling insurance had increased by just under 62%, contributing a significant amount to the cost of living crisis.
“About 25% of the cost of living challenge is down to insurance premiums,” said Watts.
Tower had taken a strategic decision to focus on “low-risk” customers, by which it meant owners at lower risk of natural disasters like flooding.
The insurer said 91% of new house policies it had issued during the year rated low or very low for flood risk, up from 87% in the previous year.
Tower also expanded its risk-based pricing to include sea surge and landslide risks during the year.
That would see most of its house insurance policyholders pay less for their house insurance, but a significant minority would see their premiums rise.
“As policies renew over the year, 90% of existing customers will see a reduction in the natural hazards portion of their premium, averaging $70 per policy, while increases for higher-risk properties will be phased in over up to four years to support affordability,” the insurer said.
During the year, Tower replaced IAG as the insurer to provide policies to Westpac, with the bank also interested in Tower’s advanced risk-based assessment capabilities for homes.
That would help drive growth in the coming year, Tower told shareholders.
Johnston said Tower’s “business as usual” claims ratio reduced substantially driven by relatively benign weather, lower inflation, reduced motor theft, as well as underwriting improvements.
The year was not without weather-related claims.
Tower told shareholders it had paid $7m in large events costs due to Dunedin flooding in October 2024, and Cyclone Tam in April 2025.
The storms across New Zealand in late October 2025 would be recorded as a large event in its current 2026 financial year with an estimated cost of $4.5m.
The car insurance market had been particularly competitive, Tower said, and the insurer had seen the premiums it charged for policies fall by 5% compared to the previous year.
Tower continued its digitisation strategy to becoming a “highly automated” insurer.
In its annual report, Johnston and chair Michael Stiassny delivered an update on Tower’s AI strategy.
“We advanced our AI-enabled insurer journey by strengthening our data foundations, defining our AI strategy, and launching our first AI operating model,” they said.
“We also created the Tower AI Design Forum to ensure safe, responsible adoption of AI and prioritisation of AI-use cases. Delivered in partnership with Deloitte and Amazon Web Services, in August 2025 we launched our AI-enabled contact centre platform.”
They said: “It is a tangible and important example of how AI is enhancing both the customer and employee experience at Tower.”