"Catastrophic weather events" rained on insurer Tower's financial results this year, pushing the company to a $1.228 million after-tax loss for the 12 months to September 30, 2023, compared with a full year after tax profit a year ago of $18.855 million.
The company won't be paying a dividend, but hopes to reinstate dividends in the 2024 financial year.
The insurer said it had "underlying profit" including large events of $7.6 million versus $27.3 million in the 2022 financial year.
Tower's gross written premium (GWP) was up by 17% to $527 million, while customer growth was 4% to 321,000.
Large event costs were $55.6 million, versus $19m in the 2022 financial year.
Tower chief executive Blair Turnbull said in the financial year Tower had navigated catastrophic weather events, widespread inflation and increasing crime.
"At the same time, we are continuing to grow and manage expenses while executing on our strategy."
He said approximately 84% of claims for the "Auckland and Upper North Island weather event" (on Auckland anniversary weekend in January) and Cyclone Gabrielle in February had been completed as of November 20, while 88% of claims for Cyclones Judy and Kevin in Vanuatu had been completed.
Turnbull said large events costs have been rising steadily in recent years.
"Tower is monitoring these trends and has important mitigations in place to help manage these risks. Our robust reinsurance arrangements have provided protection from catastrophe events this year. We estimate reinsurance will cover more than $200 million of customers’ claims for both catastrophe events combined."
To help mitigate large events impacts in the 2024 financial year the company has purchased cover for two catastrophe events up to $750 million each as well as prepaid cover for a third event up to $75 million.
"We now plan for a higher frequency and intensity of large events in both our financials and our operations."
The company said that with a solvency ratio of 159%, it was now holding $53.8 million above the minimum capital required for solvency. This is below Tower's new internal target of $67.4 million set in preparation for the new interim solvency standards released by the Reserve Bank (RBNZ).
In 2024 Tower expects GWP growth - excluding revenue from sales of subsidiary operations - of between 10% and 15%. It has set a "conservative" large events allowance of $45 million versus $38 million in the prior year.
Tower anticipates underlying net profit after tax of between $22 million and $27 million.
Turnbull said Tower is focusing on delivering efficiency, digitisation and process improvements.
"By the end of FY25 we want digital transactions to account for 80% of all New Zealand service tasks, increasing from 55% at the end of FY23. We will launch new house and motor assessing systems to reduce assessment times and repair costs. And we are expecting more than half of our call volumes to be answered by our team in Suva. We will continue to streamline the business through the sale of our Solomon Islands subsidiary and exiting our New Zealand rural commercial portfolio. It is also our intention to sell our Vanuatu business and we are going through a process of identifying a buyer. We’ll update you once we have progressed this further."
“While we have certainly faced significant challenges this financial year, our underlying result demonstrates resilience and strategic delivery which positions Tower well for long-term sustainable growth and performance,” Turnbull said.
Consideration will be given to restarting dividends in FY24 "if it is prudent to do so".