Tower has lifted its FY26 underlying NPAT guidance to $69 million-$79 million after large event claims came in below the allowance built into its forecast. Customer growth also remained strong, although customer remediation costs will continue to weigh on reported profit.
- Underlying FY26 NPAT guidance raised to $69m-$79m from $55m-$65m
- Large event claims totalled around $25m against a $45m allowance
- Unused allowance is expected to add about $14m after tax
- Customer numbers increased 8% to 345,000
- Final FY26 results due on 26 November 2026
Lower event claims lift Tower’s FY26 guidance
Tower Limited (NZX/ASX:TWR) has raised its FY26 underlying net profit after tax guidance by $14 million at the midpoint, after a milder-than-budgeted claims year left much of its large event allowance unused. The insurer now expects underlying NPAT of between $69 million and $79 million, up from its previous range of $55 million to $65 million.
The update is based on preliminary, unaudited results. Tower said it had recorded around $25 million in large event claim costs during the year, against a $45 million allowance. The resulting unused allowance of about $20 million is expected to increase underlying NPAT by approximately $14 million after tax.
Earnings normalise after an unusually strong FY25
Tower characterised the expected FY26 result as a return to a more typical earnings profile following the unusually favourable weather and claims experience of FY25, which it described as an exceptionally strong year. Its earlier guidance had assumed the full $45 million large event allowance would be used.
That makes the guidance increase more a claims-experience adjustment than a change to the insurer’s underlying growth trajectory. Gross written premium rose 3%, in line with guidance for low-single-digit growth, while Tower said competitive pricing was supporting affordability and customer expansion.
Customer growth continues while remediation costs remain
Customer numbers increased 8% over the year to 345,000, driven primarily by New Zealand home insurance policies and growth through new and existing partnerships. Tower also said expanded risk-based pricing was strengthening portfolio quality and reducing exposure to weather-related impacts, although the announcement did not quantify the effect.
Reported profit will not receive the full benefit of the improved claims outcome. Tower said further costs from its customer remediation programme were incurred in the second half, with those non-underlying items continuing to affect reported profit.
Final results will test the upgraded range
The preliminary guidance gives shareholders a clearer earnings target, but leaves several details unresolved until Tower releases its full FY26 results on 26 November. The final numbers will show how closely underlying NPAT landed to the new range, the scale of remediation costs and whether claims and reserve developments altered the preliminary picture.
Bottom Line?
The guidance upgrade is encouraging, but the more durable test will be whether customer growth and risk-based pricing can support earnings once claims experience returns to normal.
Questions in the middle?
- How much will customer remediation costs reduce reported FY26 profit?
- Where within the $69 million-$79 million underlying NPAT range will the final result land?
- Can risk-based pricing improve portfolio quality without weakening customer growth or affordability?