New Zealand insurer Tower’s net loss for the half-year to March 31 has blown out to $NZ8.7 million ($8.1 million), with impairment charges and adjustments to provisions for the Canterbury earthquakes accounting for the additional loss.

Its net loss for the same period last year was $NZ4.9 million ($4.6 million).

Tower Chairman Michael Stiassny and CEO Richard Harding say the business is poised to grow after getting its costs under control and writing off existing IT assets that were hindering performance.

The insurer is currently looking for IT solutions to raise productivity, cut expenses and improve customer experience, which prompted the pre-tax impairment charge of $NZ19.6 million ($18.3 million) on existing assets.

The impairment charge had a $NZ14.1 million ($13.2 million) post-tax impact.

“Tower has undertaken a detailed IT review and concluded that our current systems pose limitations to our high performance ambitions,” Mr Stiassny said. “We have therefore taken the decision to accelerate depreciation on our existing IT assets.”

Gross written premium was up slightly by 0.2% to $NZ146.2 million ($136.5 million) while underlying profit after tax fell to $NZ7.6 million ($7.1 million) from $NZ17.5 million ($16.3 million).

“Tower will achieve further growth and expense reduction through strategic investment in business fundamentals,” Mr Harding said. “The half-year has been characterised by Tower focusing on the core of the business, ensuring we have the fundamentals in place to become a high performing insurer.”

Pre-tax provisions for the Canterbury earthquakes were adjusted by $NZ2.9 million ($2.7 million).

The claims ratio blew out to 52.1% from 44.5% and combined operating ratio deteriorated to 94.3% from 85.4%, the result of an active Pacific storm season.

Cyclone Winston, which struck Fiji in February, incurred a lower-than-expected cost of $NZ3.3 million ($3.1 million).

Tower had settled 96% of the Canterbury claims as at March 31 and paid out more than $NZ705 million ($658.2 million) to customers in respect of the four main earthquakes that occurred in 2010 and 2011.

Its estimates of gross ultimate incurred claims for the four earthquakes have risen to $NZ822.3 million ($767.7 million) from $NZ792 million ($739.5 million) in September last year.