TWR - Tower Insurance

[kiwi2007]

Tower announces positive FY22 result

FLLYR: TWR: Tower announces positive FY22 result

23 November, 2022

Strong business performance drives positive result for Tower
Kiwi insurer, Tower Limited (NZX/ASX:TWR) has today announced full-year
underlying profit including large events was $27.3m, up 31% from $20.8.m for
the full-year 2021. Reported profit was $18.9m, compared to $19.3m in the
prior year.

Summary of key underlying results: (See note 1 below)
o Gross written premium (GWP) $457m, up 13% on FY21
o Customer numbers increased 5% to 319,000
o Management expense ratio (MER) improved to 36% vs 37% in
FY21
o Large event costs $19m vs $13.9m in FY21
o Combined operating ratio (COR) 90.1% vs 91.4% in FY21
o Underlying net profit after tax (NPAT) excluding large
events $41m vs $30.8m in FY21
o Underlying NPAT including large events $27.3m vs $20.8m
in FY21
o Reported profit including large events $18.9m vs $19.3m
in FY21

Reported profit was impacted by a $5.5m after tax additional strengthening of
the residual Canterbury earthquake provision and a provision of $2.6m after
tax for customer remediation.

Reflecting the positive FY22 results and based on Tower's ordinary dividend
policy, the Board has declared a final dividend of 4 cents per share. This
brings total dividends for FY22 to 6.5 cents per share, compared to 5 cents
in FY21.

Strong growth and business performance....etc....

https://online.asb.co.nz/ost/646957ABCBE2D1B985A14A2DAE6C2258/quotesummary/index/nzx/twr?tab=1


Seems like pretty decent results ...and 9% yield (no imputation though).

[Hectorplains]

Announcement that the CEO has flicked 116k shares.  He must've been keen to sell as they were cum divy. Oh well, it is deck building season I guess...

[Mos]

The service from Tower is appalling if you want to make a claim. Check out the number of 1 star reviews on Google reviews. Most say they do not answer the phone and never get back to you. Either a clever business model to drive short term profits and not pay claim or leading indicator of huge decline to come. I am betting on the latter - not much point in insurance if you can never claim. Not great for word of mouth.

[Basil]

Mrs got her car caught in the Auckland flood of late January.
We were assigned a case manager and we understood it would take a while for the claim to be progressed as they were literally swamped with claims.  As the weeks went by it got more and more frustrating living as a one car family, (that's like stepping back in time 30 years ago when we were so poor, we could only afford one old car).  Eventually out of frustration I started calling the case managers direct dial number and all I got was an endless series of the same messages over the next week, no matter what time of the day or evening I called.   

Then I decided enough is enough, so I called their general helpline and after waiting nearly 2 hours on hold actually got to speak to a real person and gave them a piece of my mind along the lines of... I know it would suit you guys if you never fixed our car but...
The excuse we got is our case manager had actually resigned with the stress of everything and we were assigned a new one.  I remember thinking what a load of crap....  Within a week the car had been assessed as a write-off and a couple of days later they paid out the sum insured.

A few weeks later I was at a lunch and one of the guests worked in the call center at Tower.  She told me the pressure is so intense its relentless.  The phone never stops.  The very second you finish one call the phone goes again, all day, every day.  It was an interesting wake up call for me that those guys have been under incredible pressure.

In terms of investing in Tower, I think shareholders are on a hiding to nothing with the ever-worsening ravages of climate change.

[Mos]

Fascinating anecdote Basil. You have more patience than me waiting for two hours. A real failure of Management in my view - all this waffle about insurance disruptor but seemingly unwilling or unable to answer the phone when their customers call. Panel beaters confirmed Tower is by far the worst of the bunch. Having learned my lesson, after many years as a premium paying customer, I will never take out another policy with Tower. I don't think I am the only one.

[Basil]

Not making excuses for them but to be fair Mos, as you know there was also the cyclone Gabrielle event that happened in February so two major insurance events with a couple of weeks or so of each other.  It's hard for any company to plan around the likelihood of the level of claims arising from those two major events in close succession.   There are only so many insurance assessors so when they get absolutely deluged with claims, it's understandable there will be significant delay's.  I actually ended up feeling quite sorry for the call center staff.  Constant calls all the time and I would wager a fair percentage of them were from people in a pretty emotional / stressed out frame of mind.  It must really drain the life force and energy out of you day in day out, week in, week out taking relentless numbers of calls like that.

[winner (n)]

Nothing like a 'strategic review' to get the share price moving

Seems Bain are a bit peeved at Tower going nowhere.

Maybe it's also a sign Tower have thrown the towel in the ring and finally decided it's all too hard.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/422844/408814.pdf

[Mos]

Moved from Tower to Cove for car insurance  - premium  around half. No at fault accidents in past 5 years therefore was on max no claims and multi policy discounts with Tower. Suspect Tower will lose quite a bit of business to Cove.

[snapiti]

great trading update from Tower.
I think the company is a little misunderstood, whereby they really are mainly just a marketing machine and ticket clipper company and have no more than a $12m exposure to anyone event.
I am insured with them but besides that, given my premiums have sky rocketed, I thought to myself with the la nina weather pattern ending, which tends to bring the cyclones, and moving into a el nino weather pattern chances are they maybe in for a good year.
Given the latest update I think I am right on track and already sit on some very nice capital gains....TWR investment is simple....the longer we don't get a large event the higher the share price will rise......no large earthquakes will be nice.....not a long term hold 

[BlackPeter]

great trading update from Tower.
I think the company is a little misunderstood, whereby they really are mainly just a marketing machine and ticket clipper company and have no more than a $12m exposure to anyone event.
I am insured with them but besides that, given my premiums have sky rocketed, I thought to myself with the la nina weather pattern ending, which tends to bring the cyclones, and moving into a el nino weather pattern chances are they maybe in for a good year.
Given the latest update I think I am right on track and already sit on some very nice capital gains....TWR investment is simple....the longer we don't get a large event the higher the share price will rise......no large earthquakes will be nice.....not a long term hold 

I guess I had similar thoughts when I invested once upon a time into CBL insurance ... Ouch.

The thing with insurance companies is that you can only assess the risks you know and understand ... and do you understand all the risks Tower is insuring against? I certainly don't.

But anyway - as any other high risk investment, there will be good and bad times. Just make sure you correctly predict the bad times before they arrive. Easy.

[snapiti]

black peter I will let you know if I smell an earthquake coming next week,
Yep a lot of unknowns with this one.....hence the previous comment it is not a long term hold
Sitting on a reasonable cap gain buffer

[Basil]

echo BP's comments about premiums rising but cognisant that another major weather event is now overdue.

[winner (n)]

black peter I will let you know if I smell an earthquake coming next week,
Yep a lot of unknowns with this one.....hence the previous comment it is not a long term hold
Sitting on a reasonable cap gain buffer

You could be right ... 13th anniversary of that big quake on 22nd  ...... and full moon 25th

I'll give KennRing a buzz and find out what he thinks

[snapiti]

echo BP's comments about premiums rising but cognisant that another major weather event is now overdue.

the hound is showing an unnormal level of ignorance.....La nina weather patterns bring 90% of major storm events to NZ....we are now in an el nino pattern which should last at least 12 months (often much longer)....knowledge is power

[Basil]

Superb boating conditions at the moment, that's for sure, just a "little" better than this time last year lol