New Zealand’s third-largest insurer, Tower, has raised its full-year earnings outlook after it returned to the black in the March half, posting a $NZ11.9 million ($11.2 million) net profit.

Underlying after-tax net profit is now expected to exceed $NZ26 million ($24.5 million) for the year to September, up from the previous $NZ22 million ($20.7 million) estimate.

A revamp of the business model, improved claims costs and benign weather are cited as key factors in the insurer’s recovery from an $NZ11.6 million ($11 million) loss in the corresponding half of last year.

“This result is the culmination of four years’ work to turn around Tower by fixing the foundations and challenging industry norms,” the insurer said last week.

“Simplifying and improving all aspects of our business to differentiate the company has led to strong growth in [gross written premium] and customer numbers, reduced claims costs and contained expenses.”

Gross written premium grew to $NZ169.7 million ($160.2 million) from $NZ161 million ($152.2 million) and underlying after-tax profit increased by $NZ12.1 million ($11.4 million) to $NZ19.4 million ($18.3 million).

The net claims expense declined to $NZ63.1 million ($59.5 million) from $NZ67.9 million ($64.2 million) and the large-events claims expense fell $NZ6.3 million ($5.9 million) to $NZ200,000 ($189,869).

The combined operating ratio improved 11.2 percentage points to 83.2%.

The number of open claims from the Canterbury earthquakes was down to 132 at the end of March from 163 in October.

CEO Richard Harding says the insurer will press ahead with its technology agenda.

“Our drive to become a digital insurer and our fairer approach to pricing has seen online sales increase significantly. The momentum we’ve built in the business will be accelerated by next month’s launch of our new technology platform and digital offering.”