TWR - Tower Insurance

[winner (n)]

www.chrislee.co.nz
This week's "Market News" covers Tower.

Trade Windowcasvwell

Both TWR and TWL

[Left Field]

Strong result.... holders will be happy (on top of SP appreciation of circa 40% in last 12 months)

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TWR/431819/419557.pdf

Summary of HY24:
• Gross written premium (GWP) $291m, up 20% on HY23
• Business as usual (BAU) claims ratio 49.7% vs 51.1% in HY23
• Management expense ratio (MER) improved to 31.3% vs 35.0% in HY23
• Large event costs -$1.9m vs $37.3m in HY23, due to a favourable revision to the most recent estimate for
Vanuatu cyclone claims incurred in the prior year
• Customer numbers declined 1% to 309,000 vs 312,000 in HY23 partly due to tightened risk appetite for
high-theft motor vehicle models
• Combined operating ratio (COR) including large events 80.2% vs 104.5% in HY23
• Underlying profit $36.6m vs $3.7m loss in HY23
• Reported profit $36m vs $5.1m loss in HY23
• Interim dividend 3 cents per share.

[LoungeLizard]

Great result, although well flagged in advance. Could be a stellar year if that large events provision goes largely untouched. Will be interesting to see how the market responds.

[LoungeLizard]

And the answer is - a pretty muted response from the market.
 The market as a whole is pretty depressed at the moment so I guess investors have little appetite for what is perceived as a boom/bust stock?   

[Left Field]

And the answer is - a pretty muted response from the market.
 The market as a whole is pretty depressed at the moment so I guess investors have little appetite for what is perceived as a boom/bust stock?   

Last analysis from Foryth Barr as detailed above dated 17 April  noted;

Valuation support increasing

TWR trades at just 5.2x 12-month forward underlying earnings on our updated estimates, offering substantial upside to peers IAG on 16.3x and SUN on ~15.1x. Over the last seven years TWR has traded on an average 12-month forward PE of 9.4x and at an averagediscount to its peers of -37%, meaning TWR trades below its historical valuation ranges. We find this difficult to reconcile given TWR'simproving business fundamentals, with increased scale driving improved efficiency and returns

Even more accurate today..... in a word; Undervalued.

TA looking good.

[lorraina]

Tower Updates Guidance

Kiwi insurer, Tower Limited (NZX/ASX: TWR) has today updated its earnings guidance on underlying net profit after tax (underlying NPAT) for the year ending 30 September 2024. Tower's FY24 full year underlying NPAT guidance is expected to be greater than $40m, up from greater than $35m as previously advised.

This increase is due to a continuation of positive trading conditions including unseasonably benign weather in the past two months. While there were two storms in New Zealand in May, both had relatively insignificant claims costs for Tower, and the threshold for large events was not met.

This updated guidance assumes full utilisation of the FY24 large events allowance which is conservatively set at $45m. No large events have been recorded in the financial year to date. Any unused portion of the large events allowance at year end will increase underlying NPAT to improve the full year result. For example, if there were no large events in FY24 underlying NPAT would be increased by an additional $32m ($45m less tax).

[Left Field]

Nice upgrade and nice to be 'well positioned' aye Percy

[lorraina]

Yes a very welcome bit of sunshine in a gloomy market.

[LoungeLizard]

Last day to receive the 3c dividend, so nice timing for an update to get a bit of buying going

[Left Field]

Big crossing of 1 mill shares today at $0.835 signalling some confidence today as the SP climbs above pre divvy levels.

Longer term holders seem less worried about major weather events as for the last 2 yrs TWR has been busy modifying premiums to reflect risk profiles of (say) coastal flood prone areas and certain frequently stolen car models etc etc.

In addition, the recent revenue upgrade means 19 cents earnings per share which at the current PE of 7.73 = SP of $1.46. Not bad aye?

[Poet]

Big crossing of 1 mill shares today at $0.835 signalling some confidence today as the SP climbs above pre divvy levels.

Longer term holders seem less worried about major weather events as for the last 2 yrs TWR has been busy modifying premiums to reflect risk profiles of (say) coastal flood prone areas and certain frequently stolen car models etc etc.

In addition, the recent revenue upgrade means 19 cents earnings per share which at the current PE of 7.73 = SP of $1.46. Not bad aye?

Imagine if they traded at a pe of 20 which is where iag insurance trades currently.
That would be a shareprice of $3.80

Still the most undervalued share on nzx imo

A sitting duck for a larger insurance company to take over. Unfortunately probably not an aussie one due to comcom competition worries. But definite possibility for international player

[KW]

Chart wise its looking well set up.  Nice breakout of its resistance zone, Moving Averages all in alignment and heading upwards, new 52 week high made. (note ASX chart used)

You cannot view this attachment.

Buy the uptrends, sell the downtrends.

[Left Field]

Imagine if they traded at a pe of 20 which is where iag insurance trades currently.
That would be a shareprice of $3.80

Still the most undervalued share on nzx imo

Chart wise its looking well set up.  Nice breakout of its resistance zone, Moving Averages all in alignment and heading upwards, new 52 week high made. (note ASX chart used)
Buy the uptrends, sell the downtrends.

The stars are aligned.

I'm happy I opted for TWR instead of HGH.

[LoungeLizard]

Nice little divvy coming next week  

A bit of buyer activity is keeping the SP elevated and I wonder if we'll see another positive guidance update in a month or so if there are no large events. It's calculated that NPAT goes up $2m per week from here to end  of September if the provision is unused. Could be a big payday if Mother Nature behaves.

There's also some speculation as to whether TWR could be a contender for NZX50 inclusion if the SP can continue to inch up. NPH are probably the front runners but at a current $320m cap TWR could be in the mix if the SP goes up to say 90c on the back of a exceptional result. Nothing like a bit of NZX inclusion gossip to draw the punters in 

[Left Field]

More encouraging progress

https://www.nzx.com/announcements/433340

Tower and Kiwibank sign referral agreement
 
 Kiwi insurer Tower (NZX/ASX: TWR) announces it has entered into a referral agreement for general insurance products with Kiwibank for its retail banking customers. The agreement is for an initial term of five years.
 
 Under this arrangement, Kiwibank customers choosing to insure with Tower will insure their assets directly with Tower via Tower branded policies.
 
 Tower CEO, Blair Turnbull says, "We're thrilled about the opportunity to welcome Kiwibank customers to Tower and to be joining forces with another Kiwi born and bred business.
 
 "This referral agreement presents a strategic opportunity for Tower and aligns with our focus on growing our home insurance portfolio."
 
 Kiwibank Chief Executive Steve Jurkovich says, "We're excited about entering this new partnership with Tower and to be able to support our customers to have the right protection in place which goes to the heart of our purpose of Kiwi making Kiwi better off."
 
 Tower has referral agreements in place with several other New Zealand organisations, including the Kiwi Adviser Network, New Zealand Financial Services Group and Trade Me, among others. These relationships have introduced more New Zealanders to Tower products.