Slide 1: Leading light
Leading light Full year results to 30 September 2015 24 November 2015
Slide 2: Michael Stiassny, Chairman
Michael Stiassny Chairman “Deliver attractive shareholder returns by being the leading light in New Zealand and Pacific General Insurance.” 2
Slide 3: Delivering shareholder returns
Delivering shareholder returns First year as a pure General Insurer, solid underlying profit growth in NZ and the Pacific Enhanced understanding and risk management on Canterbury, increased provisions Full year loss of $6.6m due to Canterbury provisions Full year underlying profit up 29.6% to $28.2
Slide 4: What we are covering today
Richard Harding Chief Executive Officer What we are covering today ++Performance highlights ++Canterbury ++Operational update ++Financial performance and risk management ++Strategy and outlook 4
Slide 5: Performance highlights
Performance highlights Strong underlying performance in first year as a pure General Insurer Progress on Canterbury claims, improved process Underlying profit up supported by premium and confidence in estimates; impact of provision growth and benign weather environment increase partially mitigated b
Slide 6: Group performance
Group performance Reported net loss after tax of $6.6m; underlying profit of $28.2m ++ GWP growth of 2.7%, led by Pacific $ million FY15 FY14 Movement % ++ Reported loss of $6.6m Gross written premium 305.6 297.6 2.7% -- Canterbury provision increase Reported (loss)/profit after tax (6.6) 23.6 - res
Slide 7: Performance indicators
Performance indicators Reliable insurance business with significant unrealised potential GROSS WRITTEN Gross written premium ($m) NET EARNED Net earned premium ($m) PREMIUM PREMIUM Reinsurance ratio (% of GWP) Underlying expense ratio (%) 1 200 150 0.4 ++ GWP growth slowing due 120 to policy run-off
Slide 8: What we are covering today
Richard Harding Chief Executive Officer What we are covering today ++Performance highlights ++Canterbury ++Operational update ++Financial performance and risk management ++Strategy and outlook 8
Slide 9: Continued progress
Continued progress Ongoing progress in Canterbury improves confidence CLAIMS SETTLED OUTSTANDING ++ Canterbury has greater complexity than other AND CLOSED PROPERTIES comparable events 95.6% 703 ++ Good progress: more than 15,000 property claims or 95.6% of total claims, 88% by value now closed ++ 2
Slide 10: Improved data and confidence
Improved data and confidence File-by-file review provides greater confidence on ultimate costs and improved ability to manage claims CLAIM LIFE CYCLE Assessment Pre-Construction Construction Finalised Ultimate ++ Greater certainty regarding the ultimate claims cost ++ Now have cost development curve
Slide 11: Provision increases
Provision increases Provision increases partially mitigated by ADC TOTAL CANTERBURY CLAIMS FEBRUARY 11 EVENT ++ Risk management has continued to evolve for Canterbury: +$43.6m +$53.2m -- EY review of apportionment 792 -- Increase in reinsurance cover 748 458 750 450 404 -- Expertise from Deloitte --
Slide 12: Capital and solvency
Capital and solvency Capital of $73m above target levels ++ TOWER has a long term policy of retaining within its licensed General Insurance entity 175% of the minimum solvency capital (MSC) required under the Insurance (Prudential Supervision) Act 2010. General Insurance solvency: Regulatory positio
Slide 13: What we are covering today
Richard Harding Chief Executive Officer What we are covering today ++Performance highlights ++Canterbury ++Operational update ++Financial performance and risk management ++Strategy and outlook 13
Slide 14: A New Zealand and Pacific insurer
A New Zealand and Pacific insurer Solid platform with the ability to grow in both New Zealand and the Pacific FY15: FY15: As at 30 September 2015: FY15: $ 28.2m $ 305.6m 481,133 Personal lines focus NPAT GWP Inforce policies 1 Underlying GWP breakdown New Zealand 66%2 New Zealand 80% New Zealand 86%
Slide 15: Strategic roadmap
Strategic roadmap Increased focus on values and a performance culture ++ Vision to be the leading light in New Zealand and Pacific General Insurance ++ Strategic pillars of customer, people and financial performance help us The achieve this vision Vision leading light in New Zealand and Pacific ++ Va
Slide 16: Transforming our customer interactions
Transforming our customer interactions A new way of interacting being recognised by customers NET PROMOTER SCORE (NPS) ++ Multi-year journey to improve our customer interactions 35 -- Investment in training and staff 30 -- Merger of sales and service teams 25 -- Reduced spans of control NET PROMOTER
Slide 17: Refresh of the TOWER brand
Refresh of the TOWER brand Refreshed brand to connect with customers and realise full potential ++ Brand recognition asssociated with market leaders, however brand preference does not align to recognition ++ Opportunity to improve preference by creating stronger connection with customers ++ Next pha
Slide 18: New markets and channels
New markets and channels Trade Me Insurance provides access to new markets and a new way of operating ++ Trade Me Insurance launched in mid August to deliver: innovation; digital presence; new markets ++ Fully online end-to-end service model ++ Price positioned to compete with industry disrupters ++
Slide 19: Leadership in Pacific markets
Leadership in Pacific markets Strong performance in the Pacific ++ Underlying NPAT up 17.4%, GWP up 12.2%: assisted by policy growth and currency ++ Policies grew 4.6%, slower in H2 due to withdrawal from a SME product in PNG ++ New partnerships support growth in Fiji, Cook Islands FY15 GWP by terri
Slide 20: What we are covering today
Brett Wilson Chief Financial Officer What we are covering today ++Performance highlights ++Canterbury ++Operational update ++Financial performance and risk management ++Strategy and outlook 20
Slide 21: TOWER Group Profit summary
TOWER Group Profit summary Underlying profit of $28.2m; reported net loss after tax of $6.6m $ million 2015 2014 Movement $ Movement % ++ General Insurance continued underlying profit growth General Insurance underlying profit 28.5 25.1 3.4 13.5% ++ Impact of Canterbury earthquakes Corporate financi
Slide 22: Underlying performance
Underlying performance Underlying profit growth of 29.6% supported by benign weather Consolidated profit and loss $ million 2015 2014 Movement $ Movement % ++ Reinsurance costs are up due to higher levels of cover Gross written premium 305.6 297.6 8.0 2.7% ++ Higher net incurred claims from Gross ea
Slide 23: Strong balance sheet
Strong balance sheet Balance sheet supports growth opportunities and capital returns Consolidated balance sheet $ million 2015 2014 Movement $ Movement % ++ Payment of Canterbury claims impacts both reinsurance Cash & call deposits 125.1 168.1 (42.9) (25.6%) receivables and cash balances Investment
Slide 24: Capital management
Capital management Capital management to remain a key priority moving forward Achievements Moving forward ++ TOWER remains highly solvent ++ Capital management remains a priority and with $73 million capital above shareholder returns a key focus target levels at the business and ++ Utilise reinsuran
Slide 25: What we are covering today
Richard Harding Chief Executive Officer What we are covering today ++Performance highlights ++Canterbury ++Operational update ++Financial performance and risk management ++Strategy and outlook 25
Slide 26: Strategic scorecard
Strategic scorecard Continued progress executing on the strategic priorities Staff engagement and efficiency Management of risk and capital Ongoing investment in Increased reinsurance has lowered risk systems and training Transformation of customer $12m of $34m buyback complete interactions $73m in
Slide 27: Medium term priorities
Medium term priorities Significant opportunity to improve the existing business Strategic theme Forward actions Outbound calling teams established to lift retention Growth and retention Build branding to connect with customer High performance customer service culture Execution of Trade Me opportunit
Slide 28: Thank you
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Slide 29: Underlying performance General Insurance
Underlying performance General Insurance $ million Sep-15 Mar-15 Sep-14 Mar-14 Sep-13 Mar-13 Sep-12 Mar-12 Sep-11 Mar-11 Gross earned premiums 154.3 150.4 146.0 139.1 136.4 130.8 125.0 113.9 106.2 102.1 Reinsurance (26.2) (25.7) (24.5) (23.5) (24.4) (23.5) (21.2) (20.0) (13.3) (10.2) Net premiums 12
Slide 30: Industry progress
Industry progress Settlement of claims has taken significantly longer than other recent earthquakes TIME TAKEN FOR CLAIMS TO BE SETTLED 75% settled 75% settled Numbers of claims settled New Zealand Chile Japan 120 240 360 480 600 690 780 900 1020 DAYS TAKEN ++ Canterbury claims have taken significan
Slide 31: TOWER Canterbury progression
TOWER Canterbury progression Progress remains ahead of the industry TOWER CLAIMS ESTIMATE PROGRESSION1 800 792 748 ++ Canterbury events have been more 707 complex than other comparable events 623 ++ TOWER’s costs have risen in line with Total claims cost estimate1 ($m) 458 600 other industry partici
Slide 32: Provision increase
Provision increase FY15 Net Profit after tax impact of increased provisions of $36.2m Feb 11 event Total Canterbury ++ Full year cost of Canterbury earthquakes now $36.2m, additional $13.6m costs incurred in H2 ($m) H1 H2 FY15 H1 H2 FY15 ++ Increase in provision due to movement in Balances outstandi
Slide 33: Disclaimer
Leading light This presentation has been prepared by TOWER Limited to provide shareholders with information on TOWER’s business. This document is part of, and should be read in conjunction with an oral briefing to be given by TOWER. Disclaimer A copy of this webcast of the briefing is available at h