TWR - Tower Insurance

[Basil]

It usually takes them a few weeks to get a handle on the scope of any material event. I see the annual meeting date has just been announced on 18 February. I am back from holiday by then and planning on attending and will ask at the meeting for an updated figure on how much of their $45m extreme event provision has been used.

[alkebab]

Dai-ichi Life came and took out Partners Life , so never say never .

Interesting.........

https://www-au.computershare.com/WebContent/doc.aspx?docid=%7Bb41c9a7e-3068-4669-bc7c-d7ac88367452%7D

Naomi Ballantyne is up for re-election as director, who also sits on the board with Dai-ichi Asia. Probably just a coincidence lol.

Nothing on Stiassny's replacement.

[mike2023]

I recommend people go onto Tower's website and get a quote on house insurance for their own home or any home they're thinking of buying.  Their software system is light years ahead of the competition.  It immediately assesses risk on an address specific basis and if they agree to insure you, (their system cuts out all sorts of high risk properties in low lying coastal area's) the system pre-populates a huge amount of data about the house being insured.  Try it for yourself first hand.  You'll be amazed at how their system works and its a key competitive advantage they have over their competitors.

Tower have invested a lot in recent years in reducing their risk and making their insurance quotes fair for the risk involved, (user pays).  This is a key reason the future for Tower is much brighter than their past and they are gaining market share. Don't take my word for it, try it.  https://www.tower.co.nz/house-insurance/?nst=SEM&gclid=c1085caa598618fa65673580d4b3ba30&gclsrc=3p.ds&msclkid=c1085caa598618fa65673580d4b3ba30&utm_source=bing&utm_medium=cpc&utm_campaign=Brand%20-%20House%20Insurance&utm_term=tower%20house%20insurance%20quote&utm_content=Tower%20-%20House%20Insurance

I just tried this for our house, we are a low-risk modern build, it came in at 35% lower than we paid last year, which has been going up annually with AA. I did try with the cars 6 months ago and there was no saving really.
The policy renews in May, I expect I will switch to Tower.

[seaweed]

Am looking forward to my Big div tomorrow and last weeks big SEK div and also TRA div tomorrow

[Basil]

Am looking forward to my Big div tomorrow and last weeks big SEK div and also TRA div tomorrow

Yeap, that'll keep the boat full of fuel and my family and dog full of food for a very long time !

[Dolcile]

On a red day for the market it is nice to see TWR in the green.  I'm assuming many existing shareholders have used their dividend to top up.

[Basil]

Average broker target price $2.12 and as far as I know all 3 brokers are assuming full use of their $45m extreme weather provisioning, which could be the case this year.
Average forecast for the years ahead is for EPS of 17, 19 and 22 cps, (rounded)
Average dividend forecast is 13, 14 and 16 cps fully imputed = 18, 19, and 22 cps gross, (rounded)
Forward PE for FY26 is 11.
https://www.marketscreener.com/quote/stock/TOWER-LIMITED-12924419/finances/
2 brokers rate is a buy and 1 a hold.

[LoungeLizard]

Wellington getting a real beating - a bit too soon for TWR to assess the cost and report back to shareholders on 18th. Expect a wide guidance range perhaps?

[Left Field]

Wellington getting a real beating - a bit too soon for TWR to assess the cost and report back to shareholders on 18th. Expect a wide guidance range perhaps?

Times like this TWR holders just have to have trust in their management team (and keep their holding at a level where they are comfortable with the risk.)

The reality is that recent storm events are BAU for Tower.

[Left Field]

Nice update from TWR

https://www.nzx.com/announcements/467670

They even use my BAU term to calm some recent bad weather nerves...

The BAU claims ratio of 43% was up from 38% in the prior comparable period and remains favourable compared to long-run averages of between 48% and 50%. Tower expects the BAU claims ratio to continue to increase but to remain below the long-term average this financial year.

[Basil]

Only $12.1m of the $45m extreme event provision used so far. Less used than I thought but recent storm will consume a bit more. Not bad considering the extremely wet summer we've had.

[SCOTTY]

I particularly liked Michael's comment-"It continually frustrates me that our share price does not reflect our success. It should. And as shareholders we all deserve to benefit from it".

[Basil]

Just looking at Tower from a dividend yield perspective at $1.83  $12.1m of the $45m extreme weather event used so far + the recent storm event, let me guess and say ~ $17m used so far.  I think its fair to say they're going to use more, possibly considerably more than the 10 year average of $15m large event provision this year but hopefully there's some left over for a modest special divvy in January 2027. 

Even assuming all extreme provisioning is fully used up every single year, average broker forecast is for DPS of 13 cps, rising to 14 cps and 16 cps in the years ahead, all fully imputed.  13 / 0.72 = 18.05 cps gross = ~ 10% gross dividend yield FY26, 10.6% FY27 and 12.1% for FY28.

When you consider the prospect of some special dividends on top of those outstanding forecast yields, my goodness, is this the best dividend hounds stock on the NZX ?  https://www.marketscreener.com/quote/stock/TOWER-LIMITED-12924419/finances/

From a user perspective I am pleased to report they were outstanding last week with my wife's cracked windscreen.  I filed the claim online in the late afternoon, was called by the local Novus team first thing the following morning, new windscreen ordered that morning and installed the very next day.
Outstanding service and no excess because we had the optional glass extension on our vehicle policy.  Probably helps that its a popular mainstream type vehicle that's a few years old.  If it was some fancy new European vehicle I dread to think how long it would take for the new windscreen to arrive.

[Umpah]

I heeded the Chairman's comments about climate change and the increased risks that may accrue. I think the markets have this in mind with their pricing

[Basil]

Even assuming all extreme provisioning is fully used up every single year, average broker forecast is for DPS of 13 cps, rising to 14 cps and 16 cps in the years ahead, all fully imputed.  13 / 0.72 = 18.05 cps gross = ~ 10% gross dividend yield FY26, 10.6% FY27 and 12.1% for FY28.

Is climate change risk more than the average of the last ten years and if so has this been factored into increased insurance premiums in recent years ?  That's the unknown but 10 year average use of $45m reserve is $15m according to Tower so $30m average extra income before tax over the last decade = $21.6m after tax on 340m shares = average expected special divvy of 6.35 cps in the years ahead.

Adding that to ordinary expected prospective dividends gives fully imputed DPS including average expected special divvies of 19.5 cps, (27 cps gross), 20.35 cps, (28 cps gross) and 22.35 cps, (31 cps gross) for the next 3 years.  Gross prospective yields including average expected special dividends at $1.83 become FY26 14.75%, FY27 15.3%, FY28 16.9%

There will be significant variations around the average special divvy but those prospective gross yields gives you an idea of what's potentially achievable based on the last 10 year average utilization of extreme event provision.  Will future utilization of this reserve be higher than the average of the last 10 years, that's the unknown but I think its fair to say that's the obvious risk that presents.  That said, there was some extreme level claims in the summer of 2023 that's already included in that 10 year average utilization so its anyone's guess.