Tower Limited profit halves to $22.9m as severe weather claims escalate

Tower Limited has recorded a substantial contraction in its profitability for the first half of the 2026 financial year, as a sharp escalation in severe weather events impacted the insurer's bottom line. For the six months ended March 31, 2026, the NZX and ASX-listed insurer experienced a significant halving of its reported net profit, reflecting a normalisation of claims activity after an unusually benign period in the previous year. The results underscore the ongoing challenges insurers face in managing climate-related risks and adjusting to a more volatile natural hazard landscape across New Zealand and the Pacific.

Financial Performance and Share Market Reaction

During the six months ended March 31, 2026, Tower Limited's reported net profit fell to $22.9 million, a steep decline from the $49.7 million recorded in the first half of the 2025 financial year (H1 FY25). This downturn was also reflected in the company's underlying performance metrics. The underlying net profit after tax (NPAT) for H1 FY26 stood at $36.8 million, representing a 40.3% reduction from the $61.7 million achieved during the same period in the prior year.

The financial market reacted negatively to the earnings compression. Following the public release of the half-year results on May 20, 2026, and May 21, 2026, Tower Limited's share price experienced a significant downward adjustment on the NZX, with the share price declining by 3.98% to over 8% over the course of those trading sessions.

Operational efficiency metrics also showed slight pressure. The Management Expense Ratio (MER) for H1 FY26 edged up to 31%, compared to 30% in H1 FY25. Reflecting the reduced earnings profile, the board declared an interim dividend of 5 cents per share, down from the 8 cents per share paid to shareholders in the prior comparable period.

Surge in Weather-Related Claims

The primary driver behind the reduced profit was a substantial increase in claims arising from severe weather. During H1 FY26, four significant weather events occurred, incurring estimated large event costs of $18.5 million. This represents a dramatic increase from the H1 FY25 period, when large event costs were exceptionally low at just $3 million.