Tower (ASX:TWR) Updates FY25 Guidance
Revised Underlying NPAT Guidance
Tower has updated its FY25 earnings guidance, increasing the underlying net profit after tax (NPAT) to a range of $70 million to $80 million, up from the previous $60 million to $70 million. This revision assumes full utilisation of the $50 million large events allowance.
Gross Written Premiums and Expense Ratios
The company has adjusted its gross written premiums (GWP) guidance to mid-single digits, down from the earlier range of 7% to 12%, due to a reduction in average premiums stemming from a higher proportion of lower risk policies and competitive pricing. Additionally, the management expense ratio (MER) guidance has been revised to below 31%, up from under 29%, reflecting strategic investments aimed at growth and efficiency improvements.
Impact of Claims and Non-Underlying Costs
Tower has recorded one large event, the Dunedin flooding in October, with estimated costs of around $3 million. The company is also managing nearly 250 claims from recent storms, which may exceed the $2 million threshold for a large event. Reported profit will be affected by non-underlying costs, including customer remediation and increased provisions for Canterbury earthquake claims.
Motley Fool contributor Aaron Shaw has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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