Tower said its annual underlying profit beat expectations as it rose almost 30%, but warned the bottom line was dragged down by refunding overcharged customers and extra provisioning for the Canterbury earthquakes.
The NZX-listed general insurer said underlying profit excluding large events was about $40 million in the year ended Sept 30, up from $30.8m a year earlier, and beating the forecast for earnings of between $35.4m and $39.4m.
Including the $14m from covering the cost of large events, underlying profit was about $26m, up from $20.8m a year earlier and more than the $21m-to-$25m range.
The company was more circumspect about the bottom line, saying it would take a $3m hit to cover the cost of customer remediation due to an error calculating multipolicy discounts and that it would also have to lift provisioning for the decade-old Canterbury quake claims as new claims were registered and it dealt with inflationary pressures.
Tower said the improved underlying earnings were due to increased gross written premium (GWP) from price hikes and attracting new customers, with GWP up 13% at $457m and customer numbers up 4% at 317,000.
Last week, Tower said it was going to pay $5.9m to acquire and assume Kiwibank’s rights and obligations relating to a portfolio of insurance policies that had been underwritten by the NZX-listed insurer.
The insurer’s annual dividend guidance was kept at 5.5 cents per share. The tower will report its full-year audited results in late November.