AM Best has affirmed the financial rating of A- for Tower Insurance (New Zealand) and the issuer credit rating of BBB-. The outlook for both ratings has been revised to stable from negative.

The ratings agency says the rating reflects the group’s satisfactory capitalisation, the restoration of its overall profitability and its strong business profile in New Zealand.

“Tower Australia has shown significant progress in controlling expenses, reducing lapse rates and improving the sales of its new risk business,” AM Best said.

In a bid to achieve growth, Tower spun off its Australian Wealth Management business early this year. AM Best views this spin-off as favourable because it will further enhance the group’s financial flexibility.