Slide 1: Tower 2025 Half Year Results
Tower 2025 Half Year Results 1 October 2024 to 31 March 2025 20 May 2025
Slide 2: Agenda
Agenda Chairman’s update Michael Stiassny, Chairman Business update Paul Johnston, Interim Chief Executive Officer HY25 financial performance Angus Shelton, Interim Chief Financial Officer Looking forward Paul Johnston, Interim Chief Executive Officer 2
Slide 3: Chairman's update
Chairman’s update Tower is delivering strong performance driven by focus on profitable growth and operational delivery Delivering shareholder value • Sustainable profit growth leading to consistent shareholder returns • Capital return of $45m delivered • Fully imputed HY dividend of 8 cents per shar
Slide 4: Business update
Business update Paul Johnston, Interim Chief Executive Officer 4
Slide 5: HY25 results summary
HY25 results summary • Strong underlying profit • Reported profit impacted by customer remediation & Canterbury Earthquake provisions • Pleasing house premium growth with improved risk selection • Lower motor premium growth due to rate reductions to address affordability and competition • Claims rat
Slide 6: Our performance
Our performance Positive operational and business performance GWP growth BAU claims ratio MER 1 Customers (Gross written premium) (Business as usual) (Management expense ratio) 1 4% | $297m 312,000 38% 30.4% vs $291m in HY24 vs 309,000 at HY24 vs 50% in HY24 vs 31.3% in HY24 3 Large event costs Unde
Slide 7: Improved risk selection delivers profitable growth
Improved risk selection delivers profitable growth G R O S S W R I T T E N P R E M I U M ROLLING 12 MONTHS 4%1 premium growth reflects lower risks & competitive pricing • House GWP growth 11%; 10% rate, 90% volume • Motor GWP growth -4%; policy growth offset by rate reductions to balance margin and
Slide 8: Digital strategy drives better customer experience
Digital strategy drives better customer experience Net promoter score improved to +41 NET PROMOTER SCORE • Continued My Tower improvements; 94% of car policy changes are now available digitally • New self-service functionality built and delivered in HY25 alone has reduced assisted task volumes by ar
Slide 9: Reducing MER through scale and efficiency
Reducing MER through scale and efficiency Management expense ratio (MER) improved to 30.4%; increased strategic investment MANAGEMENT EXPENSE RATIO 1 • Scale and targeted premium growth reducing MER • Digital efficiency: New Zealand digital tasks2 – 60% sales, 47% service; 66% claims lodgement • Ope
Slide 10: Strategic investments to enhance business performance
Strategic investments to enhance business performance Future state • Targeting 80% of all NZ sales, service, and claim lodgement tasks to be digital by end FY27 • New motor and house assessing systems reducing assessment time and repair costs • New contact centre platform planned to deliver frontlin
Slide 11: BAU claims ratio below historical levels
BAU claims ratio below historical levels Business-as-usual claims ratio reduced to 38.1% • Prior period targeted rating has earned through to the loss ratio • Prolonged period of favourable weather BAU CLAIMS RATIO 1 • Improved risk selection including prior period off-risking of high theft motor ve
Slide 12: Consistent improvement in underlying performance
Consistent improvement in underlying performance Underlying NPAT excluding large events was $64m in HY25 UNDERLYING NPAT1 • Underlying business improving half-on-half • Increase in premium from targeted policy growth and targeted rate increases earning through • Reduction in BAU claims ratio from ca
Slide 13: Financial performance
Financial performance Angus Shelton, Interim Chief Financial Officer
Slide 14: Group underlying financial performance
Group underlying financial performance • Gross written premium growth of 4%1 • BAU claims ratio reduced to 38.1% due to targeted rate increases, risk selection and benign weather • One large event in HY25 with cost of $3m • Management expense ratio improved to 30.4% as a result of business growth an
Slide 15: Movement in underlying NPAT
Movement in underlying NPAT • Underlying NPAT1 of $61.7m vs $36.6m in HY24 • One large event in HY25 of $3m before tax versus a release of $1.9m before tax in HY24 • Business growth includes higher net earned premium less the associated growth in claims and management • Strategic investments are bei
Slide 16: Lower frequency and severity of claims
Lower frequency and severity of claims NZ MOTOR SEVERITY1 & FREQUENCY2 • Prior period high theft motor off-risking has lowered frequency and severity of motor claims • Reduction of external assessing usage has lowered motor severity • Improved house selection and risk-based pricing is reducing frequ
Slide 17: Continued improvement in management expense ratio
Continued improvement in management expense ratio MOVEMENT IN MANAGEMENT EXPENSE RATIO (MER) • MER reduced 0.9% to 30.4% • Scale efficiencies from business growth contributes 3% reduction in MER • Strategic investments are being made to improve growth and efficiency • Timing differences related to r
Slide 18: Conservative investment strategy
Conservative investment strategy • Net investment income $10m in HY25; in line with HY24 • Conservative investment strategy with low duration (target of 0.5 years) • Running yield on the core investment portfolio is 3.9% as at 31 March 2025 • Interest rates are now past their peak with yields expect
Slide 19: Canterbury earthquakes & customer remediation
Canterbury earthquakes & customer remediation Canterbury earthquakes (CEQ) • HY25 charge of $6.2m after tax, treated as a non- OPEN CEQ CLAIMS underlying item • 18 properties open as at 31 March 2025 • 15 new over cap or reopened claims from NHC in the half (+10 vs HY24), with an average cost higher
Slide 20: Reinsurance programme
Reinsurance programme $800m • Catastrophe reinsurance of up to $800m for two events, up from $750m in FY24 • Additional prepaid third event catastrophe cover up to $85m with $20m retention Reinsurance Reinsurance • Increase in retention for catastrophe events mitigated by 3- coverage of coverage of
Slide 21: Capital and solvency position
Capital and solvency position TOWER SOLVENCY • Solvency ratio1 of 164% (212% as at 30 Sep 24) NZ PARENT ($m) • Tower’s regulatory solvency position is calculated under the second amendment to 212% 173% 164% the Interim Solvency Standard (ISS), effective 1 March 2025, which reduced Tower’s solvency m
Slide 22: Looking forward
Looking forward Paul Johnston, Interim Chief Executive Officer
Slide 23: Second half priorities
Second half priorities • Targeted growth focused on lower risk properties and growing newly established partnerships • Customer experience improvements • Risk-based pricing - landslips and sea surge • End-to-end customer data management • Efficiency, digitisation, and process improvements through de
Slide 24: FY25 guidance and future targets
FY25 guidance and future targets HY25 FY25 FY27 Actual Guidance Target GWP growth 4% Mid-single digit 10% - 15% (excluding operations sold) Large events cost/allowance $3m $50m Management expense ratio 30.4% < 31% < 28% Combined operating ratio 69.7% 82% - 84% < 86% Underlying NPAT $61.7m $70m - $80
Slide 25: Questions?
Questions? -
Slide 26: Appendices
Appendices
Slide 27: Business unit distribution
Business unit distribution TOWER DIRECT PARTNERSHIPS PACIFIC • Underlying growth of 2%1 • Underlying growth of 13% • Underlying growth of 6%1 • House new risks sold +43% vs HY24 • Total in force risks increased 9% to • Solomon Islands & Vanuatu 119,000 businesses sold in FY24; PNG in FY23 T O W E R
Slide 28: Reconciliation between underlying profit after tax and reported profit after tax
Reconciliation between underlying profit after tax and reported profit after tax Underlying and reported profit/(loss): • “Net insurance revenue”, “net insurance service expense” and “underlying profit” do not have a standardised meaning under Generally Accepted Accounting Practice (GAAP). Consequen
Slide 29: Disclaimer
Disclaimer 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. A copy of this webcast of the briefing is available at http://www.towe