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Tower reports loss as storms bite

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New Zealand insurer Tower has reported a $NZ6.7 million ($6.3 million) loss after the impact of severe storm activity, earthquake provisions and a dispute settlement, but the company says gross written premium jumped and its technology strategy is on track.

The loss narrowed from $NZ8 million ($7.5 million) in the previous year as gross written premium (GWP) rose 23.7% to $NZ336.1 million ($315.4 million) and management and sales expenses were controlled.

“The short-term challenges we’ve seen in claims have been addressed through pricing and underwriting responses,” CEO 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 reported result was affected by a $NZ16.2 million ($15.2 million) after-tax charge flagged earlier in the year from a settlement with Peak Re regarding an adverse development policy.

There was also an $NZ11 million ($10.3 million) before-tax impact from weather and large events and a $NZ3.6 million ($3.4 million) impact from Canterbury provisions.

The combined operating ratio deteriorated to 95.4% from 91.1%.

Tower is moving forward with its own strategy after a Suncorp bid to acquire the business was blocked by the competition regulator last year. Canadian insurer Fairfax had previously also looked at purchasing the group.

Mr Harding said major technology upgrades were progressing well and an IT simplification would deliver a step-change in results from the end of fiscal 2019.

The company is mid-way through a plan to reposition itself as a contemporary, challenger brand underpinned by a customer-focused digital-first strategy.

About 45% of new business sales are now online, up from less than 10% during fiscal 2016.

“In the past few years we have talked a lot about how the implementation of new technology will accelerate growth,” Chairman Michael Stiassny said.

“Today, the significant uplift in customers using our digital channels to engage with and purchase Tower products is proof that our confidence in user-friendly technology is well placed.”

The company also said it welcomed the recent government announcement of an inquiry into the Earthquake Commission as an important step toward ensuring that mistakes of the past are learnt from and not repeated in future.