Tower Insurance has reported a sharp drop in half year earnings, with underlying net profit after tax falling to 36.8 million dollars from 61.7 million dollars a year earlier, a 40 percent decline that the company has blamed on a run of weather events, a softer pricing environment and the ballooning weight of government taxes and levies on insurance premiums.
Net profit on a statutory basis, which captures one-off items, fell even further, dropping 54 percent to 22.9 million dollars from 49.7 million dollars in the same period last year. The result, covering the six months to 31 March 2026, was released to the New Zealand and Australian stock exchanges on Wednesday and reported in detail by RNZ and interest.co.nz.
Tower is the country’s third largest general insurer behind IAG and Suncorp, covering homes, contents, cars and small businesses for around 322,000 customers. Its first half was hit by four major weather events, including ex-tropical storm systems that pushed through Northland and the upper North Island earlier in the year. Large event costs surged to 18.5 million dollars in the half, up from just three million dollars in the same period a year ago.
The Wellington flooding in early April is not in those numbers. Tower has indicated the capital region floods will cost it another five million dollars or so, with that hit landing in the second half of the financial year. The company has set aside a 45 million dollar large events allowance for the full year, with around 26 million dollars of that already used or earmarked once the Wellington claims are processed.
Despite the weather hit, chief executive Paul Johnston said the underlying business was holding up, with the customer base growing 5 percent year on year and home insurance policy numbers up 9 percent in a market where many households are cutting back. “Competitive pricing is supporting customer affordability and growth, while our expanded risk-based pricing is strengthening portfolio quality,” Johnston told investors on the results call.
Gross written premium, the headline measure of how much business an insurer is writing, came in at 301 million dollars, barely changed from 297 million dollars in the corresponding half a year earlier. Tower has trimmed its full year premium growth guidance to low single digits, down from the 5 to 10 percent range it pointed to last year. The company said that reflects both a softer economy and a deliberate strategy of bringing in more low risk properties at lower average premiums rather than chasing higher priced policies in flood and quake prone areas.
Tower’s board has cut the interim dividend to 5 cents per share from 8 cents a year earlier. The company said solvency remained strong at 155 percent of the regulatory minimum, well above the level required by the Reserve Bank, which leaves room to keep paying dividends through a difficult patch.
The sharper message from Tower, and one that will be picked up by every other home insurer in the country, was about the share of each premium dollar that now flows straight to the government before any claim is paid. “Government levies and taxes already account for nearly half of an insurance premium, and the cumulative impact of regulation – though well-intentioned – adds significant cost and complexity,” Tower chair Naomi Ballantyne said in her address on the result, welcoming the government review into insurance affordability that is currently under way.
The natural hazards levy that funds the Natural Hazards Commission, the levy that funds Fire and Emergency New Zealand, and GST together now make up close to 40 percent of a typical Tower home insurance premium, the company said. From 1 July 2026 the natural hazards levy is capped at 119.50 dollars plus GST per dwelling and 23.90 dollars plus GST for contents, under changes announced earlier this year, but the Fire and Emergency levy is rising again to fund the merged emergency service. Tower has previously argued that those compounding charges, layered on top of higher reinsurance costs, are pushing some households to either underinsure or drop cover altogether, particularly in higher risk parts of the country.
The full year outlook has been trimmed. Tower is now guiding to underlying net profit of between 55 million and 65 million dollars for the September 2026 year, well below the record 107 million dollars it posted in 2025, and that range assumes the company uses all of its large events allowance. A quiet second half on the weather front would push the result toward the top of the range, and a single big event of the size of the 2023 Auckland Anniversary floods or Cyclone Gabrielle would blow through it.
Tower shares were trading on the NZX at around 95 cents before the result, valuing the company at roughly 350 million dollars. The market had been bracing for a soft half, with analysts at Forsyth Barr and Jarden having flagged the weather hit in March previews, so the share price reaction on the day of the result was relatively contained.
For the wider economy, Tower’s result is another reminder that the cost of insuring a house in New Zealand is not just a function of what insurers charge to cover their own risks. With weather claims rising, reinsurance costs still elevated after a string of big global catastrophes, and levies climbing to fund the country’s natural hazards and emergency response systems, the price of a household policy has structural pressure pushing it up year after year. The government review into insurance affordability announced earlier in the year, which is looking at competition, pricing transparency and the levy structure, is expected to report back to ministers later in 2026.
What do you make of Tower’s result and the broader squeeze on household insurance premiums? Are you seeing your own home insurance bill keep climbing despite no claims? Drop a comment below and let us know.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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