New Zealand’s third-largest general insurer Tower today announced a return to the black with a first-half net profit of $NZ11.9 million ($11.3 million) as ongoing efforts to revamp the business yield dividends.

Improved claims cost and benign weather also helped the insurer to recover from the $NZ11.6 million ($11 million) loss it suffered in the corresponding period last year.

The encouraging results have prompted Tower to lift its underlying after-tax net profit forecast for this financial year to above $NZ26 million ($24.6 million) from $NZ22 million ($20.8 million) previously.

“The first-half has seen Tower return to profit, evidence that Tower’s strategy to fix and grow the business is paying off,” the insurer says in a statement to the market.

“This result is the culmination of four years’ work to turn around Tower by fixing the foundations and challenging industry norms. 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 rose to $NZ169.7 million ($160.4 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).

Net claims expense declined to $NZ63.1 million ($60 million) from $NZ67.9 million ($64.2 million) and large events claims expense fell $NZ6.3 million ($6 million) to $NZ200,000 ($189,000).

The combined ratio improved 11.2 percentage points to 83.2%.

Gross written premium in the core New Zealand portfolio climbed 8.9% in the March half to take total GWP growth to 5.4%.

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

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

“We’re on a mission to challenge the traditions and norms of a stale insurance industry and I’m pleased that it’s resonating with customers and our business is growing,” he said.

“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.

“Our new digital offering, together with prioritising a great customer experience, will see us continue challenging the market.”