Tower to resume dividend payments after five-year pause

The November 2020 floods in Napier has been a drag on insurer Tower's financial result. Photo / Paul Taylor

Insurer Tower says it intends to pay a dividend in May - the first time the company will do so since March 2016.

Blair Turnbull, Tower chief executive, announced to the stock exchange this morning ahead of its annual general meeting today that it hoped to begin paying shareholders again with an indicative interim dividend of 2.5 cents per share due to be confirmed at its half-year results.

Turnbull also confirmed there would be no change to its full-year 2021 profit guidance of at least a 5 per cent improvement on its 2020 underlying net profit of $28.5 million.

He said a focus on creating a more agile and digital business model had helped the company weather a number of large events in the first four months of the financial year, while still maintaining a focus on growth and innovation.

"In the four months to 31 January 2021, we achieved $129m Gross Written Premium (GWP), representing growth of 6 per cent on the same period last year thanks to our ongoing focus on delivering for our customers.

"Along with the addition of the Youi NZ portfolio, this growth has seen our market share increase to 9.2 per cent in December 2020, up from 8.4 per cent at the same time last year," Turnbull said.

The Lake Ohau fire and Napier floods had resulted in a $10m large event expense year to date which would impact its underlying net profit. Its reinsurance cover would be triggered at $14m.

Turnbull said as well as growing the business it was seeing more people use its online service MyTower and more than 65,000 customers had registered for it since launch a year ago.

"These customers now have full control of their insurance at their fingertips. They can make payments, access rewards, add new policies, or modify existing ones, all with a few clicks of a button."

He said the migration of all Tower Direct customers to its new digital platform was almost complete with over 270,000 policies on its cloud-based data platform.

The move to a self-service model and ongoing removal of legacy technology had improved its management expense ratio which was 37 per cent for the four months to January 31 - down 2 per cent on the same prior period.

Turnbull said it was also growing the business through signing new partnerships and recent referral agreements had been agreed with AIA, NZ Defence and the Auckland Council.

He said Tower was in a good position where the company has strong capital and solvency, no debt, a growing and innovative business and consistent profitability.

"We now have the opportunity to accelerate our progress through a number of sensible investments and will continue to seek attractive bolt-on opportunities which are aligned to our lines of business, like the recent Youi NZ acquisition, Club marine referral agreement and ANZ deal."

Yesterday the company announced it would pay $14 million in cash to acquire from ANZ NZ a portfolio of insurance the insurance company already underwrites.