New Zealand insurer Tower announced today its full-year earnings guidance has been upgraded to reflect higher rates and organic growth.

Underlying net profit after tax, including large events, will be around $NZ26 million ($23.3 million) for the year to September 30. The insurer previously was expecting $NZ21-25 million ($18.8-22.4 million).

Excluding large events, underlying net profit after tax should come in at $NZ40 million ($35.8 million), against the previously advised range of $NZ35.4-39.4 million ($31.7-35.3 million).

“This increase to underlying [net profit after tax] follows continued growth in gross written premiums, reflecting rate increases and organic growth from existing and new customers, stronger retention, as well as disciplined management of claims and operating costs,” Tower says in a market update.

The update says unaudited gross written premium has increased 13% to $NZ457 million ($409 million) during the 2022 financial year, compared to the prior 12-month period while customer numbers have grown 4% to 317,000 from 304,000.

However, reported profit will be impacted by additional strengthening of the residual Canterbury earthquake provision, due to factors including inflationary impacts and the receipt of new claims.

Tower says there will also be a one-off provision of around $NZ3 million ($2.7 million) after tax for customer remediation arising from an error in the calculation of multi-policy discounts.

“Tower is in the process of identifying affected customers and determining refunds,” the update says.