Tower to maintain strong capital levels despite recent payouts

AM Best expects Tower’s adequate operating performance to continue.

New Zealand insurer Tower is expected to maintain a very strong level of risk-adjusted capitalisation over the medium term, despite recent capital actions, AM Best said.

Tower's balance sheet remains robust, supported by its capital adequacy, which stood at the strongest level as of the fiscal year ending 30 September 2024, according to AM Best’s Capital Adequacy Ratio (BCAR). 

Whilst the company paid a dividend and conducted a share buyback in the first half of fiscal 2025, AM Best anticipates that risk-adjusted capitalisation will remain very strong, aided by retained earnings. 

The insurer’s regulatory solvency capital under New Zealand’s Interim Solvency Standard is also projected to stay comfortably above minimum requirements.

AM Best expects Tower’s adequate operating performance to continue, with underwriting and investment results supporting profitability over the medium term. 

In fiscal 2024, Tower recorded a return on equity of 22.6% and a net/net combined ratio of 83.1%. 

The performance, though subject to volatility from catastrophe events, is underpinned by disciplined risk selection and pricing strategies.

Tower holds a modest 5% share of the overall non-life insurance market in New Zealand but maintains a strong position in its core home and motor segments, primarily through direct and partnership distribution. 

The company’s capital strength is further supported by strong financial flexibility, a conservative investment approach, and a prudent reinsurance programme.