TWR - Tower Insurance

[Fiordland Moose]

I topped up with a few more this morning.  I want to be super well positioned for that monster dividend feed on 29 January lol.

me toooooo

prepaid drip on steroids, how I think of it.

[seaweed]

Yeah, I'm really upset about that ROFL
Tower reports record FY25 result, increased dividends

Kiwi insurer, Tower Limited (NZX/ASX: TWR) today announced a record underlying profit performance for the year ended 30 September 2025, delivering an underlying NPAT of $107.2m and a reported profit of $83.7m. The result was driven by low large events costs and a significantly reduced business-as-usual (BAU) claims ratio, alongside customer growth. Would that be about 12% YLD Just topped up with another 20,000 Yippie Yi Yah
 
Reported profit reflects adjustments for increased Canterbury earthquake claims cost estimates, the ongoing cost of customer remediations and a provision for software impairment.

FY25 highlights:
• Underlying NPAT: $107.2m (up from $83.5m in FY24)
• Reported profit: $83.7m (up from $74.3m in FY24)
• Gross written premium (GWP): $600m, up 2%
• Customer numbers: 318,000 (up 4%)
• BAU claims ratio: 41% (improved from 48%)
• Combined operating ratio (COR): 74.1% (vs 79%)
• Management expense ratio (MER): steady at 31.4%

Reflecting the positive results, Tower's Board has declared a fully imputed final dividend of 16.5 cents per share. This brings total dividends for FY25 to 24.5 cents per share.
WOW !! 

[seaweed]

I topped up with a few more this morning.  I want to be super well positioned for that monster dividend feed on 29 January lol.

Same here, looks like about 12% YLD at $2?

[Basil]

What's the case for income then ?
Its anyone's guess really but maybe they can pay about 20 cps fully imputed in FY26, down from 24.5 cps in FY25, (a year of very low claims on the large events contingency)
20 cps fully imputed = 27.8 cps gross.  On a net purchase price of $1.755, that's a gross yield of 15.8%.  Oh my goodness, surely not...

Seaweed, see this extract from my earlier post this morning.  I think its on a prospective 15.8% gross yield for FY26 which is stunning.    I added another 25,000 this morning.  Just on that modest extra top up the extra dividend in January is $4,125  I know this company has risk, (it is an insurance company after all) but I think investors can take comfort from knowing their 10 year average large events claim has been $15m and there's been some shocker weather events in those years especially the horrendous summer of 2022/3
15.8% gross is based on average utilization of the extreme event provisioning and its well worth noting the company has genuine ambitions to grow in the years ahead and with growth comes economies of scale.  Translation...dividend growth from the already very high level, on the balance of probabilities in the years ahead is a real chance !

[Shareguy]

Craig's think

FY26 NPAT guidance has been set at $55.0m to $65.0m (incl. full use of the large events allowance). On a headline basis, the mid-point of this range ($60m) is 5.1% above VA consensus ($57.1m). However, given TWR is factoring in a $45m large event allowance in FY26 (vs. the street at $51.7m), we must adjust for the difference, which equates to c.$4.8m (post-tax). On a LFL basis, we estimate the mid-point of FY26 guidance is c.3% below consensus. Furthermore, we note that TWR is assuming GWP growth of 5%-10% (vs. consensus of 3.2%), which may present additional downside if TWR's falls short of this target. While there is a reasonable amount to unpick, we do not see any major surprises in the result; (i) rates now appear to be stabilising, (ii) GWP will benefit from new partnership channels in FY26, and (iii) the Group's B/S remains strong. Stock to trade flat today....conference call 10am NZT

[Dolcile]

I also got a few more at $2... wasn't expecting to be underwater already lol

[alkebab]

I also got a few more at $2... wasn't expecting to be underwater already lol

Might be a slow creep up to $2.x given that it only goes ex-div in January.

[seaweed]

I also got a few more at $2... wasn't expecting to be underwater already lol

I'm under water quite a lot and tend to do a lot of floating, but at the moment my average price was $1.49 and climbing.  

[seaweed]

Seaweed, see this extract from my earlier post this morning.  I think its on a prospective 15.8% gross yield for FY26 which is stunning.    I added another 25,000 this morning.  Just on that modest extra top up the extra dividend in January is $4,125  I know this company has risk, (it is an insurance company after all) but I think investors can take comfort from knowing their 10 year average large events claim has been $15m and there's been some shocker weather events in those years especially the horrendous summer of 2022/3
15.8% gross is based on average utilization of the extreme event provisioning and its well worth noting the company has genuine ambitions to grow in the years ahead and with growth comes economies of scale.  Translation...dividend growth from the already very high level, on the balance of probabilities in the years ahead is a real chance !

Sounds good to me. I will up your 25,000 to 30,000 and will buy more on close  

[Basil]

36,000 extra now, sorry mate I couldn't help myself and that might be a moving target too lol

[alkebab]

Everything is down today so it's nice to see TWR, SEK and TRA still holding up, lol.

[BlackPeter]

Great times for the early fans.

Just wondering though, how the year after this is going to look like? Analysts as well as the company seem to look at somoething like 15 to 17 cents EPS for 2026, and hey - who can say what comes afterwards.

Might be the time of enjoying the peak ... but leave the boat before it crushes down again. Even insurance is a business, and if the returns are too good everybody will move into it.

[Left Field]

Great times for the early fans.

Just wondering though, how the year after this is going to look like? Analysts as well as the company seem to look at somoething like 15 to 17 cents EPS for 2026, and hey - who can say what comes afterwards.

Might be the time of enjoying the peak ... but leave the boat before it crushes down again.

Crikey "Peak Tower" according to BP.

But then again isn't this the poster who continually reminds us that no one can predict the future.

It's just as likely that TWR will exceed its projections for 2026/7.

[Basil]

Great times for the early fans.

Just wondering though, how the year after this is going to look like? Analysts as well as the company seem to look at somoething like 15 to 17 cents EPS for 2026, and hey - who can say what comes afterwards.

Might be the time of enjoying the peak ... but leave the boat before it crushes down again. Even insurance is a business, and if the returns are too good everybody will move into it.

Lets have a look at the facts.  According to Tower in their presentation yesterday the 10 year average extreme events is $15m and they are providing $45m so in an average year there's going to be $30m before tax ($21.6m after tax) over provisioning that will flow through to operating profit after tax which at the mid point of forecast is $60m so a total estimated for FY26 of ($60m + $21.6m) = $81.6m on 345.2m shares = EPS of 23.64 cps.

Craigs reckon the industry average is a PE of 14.2 so 14.2 x 23.64 = $3.36.  Back out the forthcoming 16.5 cps divvy from the $1.93 share price today and treat it as a return of capital that means you're effectively only paying $1.93 - 0.165 =  $1.765 for forecast FY26 earnings of 23.64 cps = forward PE of only 7.5.

If you read through the presentation materials you'll see they have clearly articulated plans for growth including access to Westpac customers from July 2026.
Maybe open both eyes and just look at the numbers objectively, read through the presentation and have a look at what metrics other insurance companies are trading on.  My forecast gross dividend is 15.8%.  You're being paid a record yield to enjoy future earnings growth and also buying on dirt cheap metrics. 

[Dolcile]

Well put, Basil.   

I got to the cash flow statement and was in investor heaven