New Zealand’s third-largest general insurer Tower lifted its net profit to $NZ14.86 million ($13.86 million) in the six months to March but says it expects to operate in a “low growth environment” for the next 12 to 18 months.

Tower also announced plans to axe 108 jobs and save $NZ7.2 million ($6.72 million) a year by lowering its management expense ratio to 35%, from 39%.

Due to fallout from the coronavirus pandemic, it has forecast a lower growth rate in the second half amid a “recessionary economic environment.”

“In anticipation of this extended economic slowdown and low- growth environment, we need to take action now to reduce our cost base,” outgoing CEO Richard Harding said.

“No business will be completely immune to the impact of the global economic downturn we’re experiencing and our plans must adjust accordingly.” Tower has appointed London-based Aviva executive Blair Turnbull as CEO from August when Mr Harding returns to his home in Sydney.

Tower lowered the top-end of its full-year profit forecast by two million dollars to $NZ28 million ($26.12 million), compared with 2019’s profit of $NZ16.8 million ($15.67 million).

Tower CFO Jeff Wright says the strong first half included a slowing of growth through March as the impacts of COVID were felt.

“While we saw this continue through April and May and it will impact our second half, it is good to see business returning as the economy reopens,” Mr Wright said.

The company expects to refund $NZ6.8 million ($6.34 million) in premiums to motor customers in response to the COVID-19 lockdown. This would be “overall neutral” to Tower’s financial results however, as it was offset by lower motor vehicle claims in New Zealand due to the travel restrictions imposed.

Gross written premium rose to $NZ183.63 million ($171.32 million) in the first half, from $NZ169.7 million ($158.32 million) a year earlier.

The combined ratio widened to 85.4%, from 83.2% in the same period a year earlier, and tropical Cyclone Harold and the Timaru Hailstorm resulted in a $NZ10.9m ($10.17 million) before-tax impact.