Tower has affirmed its annual earnings guidance, with gains in gross written premium and a lower claims ratio offset by a bigger bill for an extended and more staggered roll-out of its new digital platform.
The Auckland-based general insurer still expects net profit of more than $22 million in the year ending Sept. 30, turning around a loss of $6.7 million in the September 2018 year. That forecast assumes Tower using the full $10 million reinsurance excess it has for large events.
Tower lifted gross written premiums by 7.9 percent in the four months ended Jan. 31, while lowering its claims ratio to 48.3 percent from 52.3 percent in 2018. It said the improved ratio was due to underwriting and pricing to offset inflation.
The company’s shares rose 1.5 cents, or 2.1 percent, to 74 cents.
The insurer has been overhauling its business in recent years, including the construction of a central IT platform to replace what had been a fragmented and complicated backbone.
The goal is to give Tower greater flexibility than its larger rivals operating on legacy systems and enable it to adapt to new customer demands more easily and draw on a deeper pool of data for pricing, the company says.
Tower is 70 percent through the first phase of that development, with the remaining work expected to be live by March 31, it said. The insurer said the success of the programme so far has encouraged it to extend its scope and let its partners use the new technology.
The company also said it plans to push out the delivery of the second phase of the plan to the second half of the 2019 financial year to reduce the risk of running two projects at the same time.
The changes will likely lift the cost of the programme to $45 million from the board’s approved investment of $38.5 million, including contingency.