Tower has reported a 54% drop in half-year profit to $NZ22.85 million ($18.8 million), pointing to subdued market conditions and competition driving down premiums in New Zealand.

Revenue slipped 2% to $NZ291.17 million ($239 million) while gross written premium was up 1% to $NZ301 million ($247 million) for the six months to March 31.

The company earlier warned its full-year result will be lower than in 2024-25, which was a relatively benign year for losses.

For the full year, it is forecasting GWP growth in the low single digits and a combined operating ratio of 86%-88%.

Tower paid out $NZ18.5 million ($15.2 million) on large weather events in the half, compared with an unusually low $NZ3 million ($2.5 million) in the previous corresponding period.

Customer numbers grew 5% year on year to 327,000, driven by growth in NZ home insurance policies – an area of focus for Tower. This was offset by premium rate reductions due to a softer rating environment.

CEO Paul Johnston says in the second half Tower will launch a partnership with Westpac, broadening its distribution channels, and will continue incorporating AI and lifting call centre capability.

Chairman Naomi Ballantyne says a government review of insurance affordability and availability marks a critical conversation for New Zealand, but “there is a lot within our control as insurers”.

Tower says it has worked on plain-English policies, giving customers more visibility on what drives their premiums and how they change over time.

“We are also helping them understand key risks, especially climate risk, so they can make informed choices,” Ms Ballantyne said.

The company is using technology to reduce costs and improve customer experience, and is developing parametric cover and exploring usage-based pricing, she adds.