Tower has raised its profit guidance for the year to September due to unusually favourable weather, lower inflation and fewer total loss house claims.

The New Zealand insurer now expects annual profit of $NZ70-$NZ80 million ($65-$75 million), up from a February forecast of $NZ60-$NZ70 million ($56-$65 million).

The forecast combined operating ratio range is now 82%-84%, compared with 84%-86% previously. 

Gross written premium growth is expected to be “mid-single digits”, down from the 7%-12% flagged in February, following a decline in average premiums.

“This reduction is due to a higher proportion of lower-risk new house insurance and motor policies, as well as more competitive pricing in the New Zealand market,” Tower said.  

The insurer has recorded one “large event” so far this financial year – Dunedin floods in October, which are estimated to have cost $NZ3 million ($2.71 million).

Easter storms may exceed the $NZ2 million ($1.87 million) threshold for a large event, with about 250 claims lodged by Tuesday.  

The guidance assumes full utilisation of a $NZ50 million ($46.74 million) large events allowance.  

Tower’s half-year results will be announced on May 20.