New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

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<li>Tower (TWR) has revised its FY23 guidance and now expects underlying profit after tax to be between NZ$7m and NZ$10m, up +NZ$8m at the midpoint.</li>
<li>The upgraded guidance reflects lower-than-expected costs relating to large events for the period. </li>
<li>TWR's previous guidance, issued in July 2023, assumed full utilisation of a NZ$50m large events allowance. </li>
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Tower (TWR) has revised its FY23 guidance and now expects underlying profit after tax to be between NZ$7m and NZ$10m, up +NZ$8m at the midpoint.
The upgraded guidance reflects lower-than-expected costs relating to large events for the period. 
TWR's previous guidance, issued in July 2023, assumed full utilisation of a NZ$50m large events allowance. 


Tower Limited - FY23 Updated for Final Large Event Costs

Thematic (Sector/Industry)

<ul><li>The National Institute of Water and Atmospheric Research (NIWA) released its outlook for October to December 2023 on 29 September 2023.</li><li>As part of its outlook, NIWA declared that El Niño—characterised by 'stronger or more frequent winds from the west in the summer'—had officially arrived.</li><li>El Niño generally brings warmer temperatures and stronger winds across the country, with below–average rainfall in the north and east of the North Island and above–average rainfall in the west of the South Island. </li></ul>

The National Institute of Water and Atmospheric Research (NIWA) released its outlook for October to December 2023 on 29 September 2023.As part of its outlook, NIWA declared that El Niño—characterised by 'stronger or more frequent winds from the west in the summer'—had officially arrived.El Niño generally brings warmer temperatures and stronger winds across the country, with below–average rainfall in the north and east of the North Island and above–average rainfall in the west of the South Island. 

Forsyth Barr General Insurance Digest - Edition 5—El Niño An Insurers Amigo?

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Director, RaaS Research Group

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<h2>Tower Ltd</h2>
<h3>Focused on sustainable growth and earnings</h3>
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<p>Tower Limited is a New Zealand-based general insurance company. Tower’s insurance operations are focused on New Zealand and the Pacific region. The group offers car, home &amp; contents, business, travel and boat insurance. Over the last few years, Tower has resolved a number of legacy issues following the Christchurch earthquake, and also embarked on a strategic direction of digitalisation and simplification, including changes to its IT systems and legal structure. Tower recently acquired Youi NZ, Club Marine and ANZ Bank’s rights over a portfolio underwritten by Tower for $14m. TWR was well prepared for the impact of COVID in FY20 and in FY21 remains well capitalised (3x regulatory minimum at HY21) despite recent disaster-related claims and a reduction in FY21 guidance. Tower is focused on sustainable growth and earnings through enhanced insights from data to inform its digitisation agenda both in New Zealand and the Pacific region. The company is leveraging partnerships that allow the business to scale and further expand its product offering.</p>
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<p><strong>Business model</strong><br>Tower has a market share of approximately 9% of the New Zealand general insurance market and offers general insurance products in NZ. The company has repositioned over the last few years to become a cloud-based digital challenger brand in New Zealand. The transformation leaves the company with more efficient operations and the potential to substantially lift returns on capital. However loss rates in some classes combined with COVID impact and some weather events have been challenging headwinds in FY21.</p>
<p><strong>With growth come returns?</strong><br>In May 2021 the company reduced full year guidance due to higher frequency of large house claims (mostly fire), lower-than-expected investment returns, higher-than-expected large events and emerging inflation in claim costs. Severe floods on New Zealand’s West Coast have not caused the company to update guidance with the full year result due in November.</p>
<p><strong>Tower needs an improved track record but isn’t overvalued</strong><br>TWR competes directly with the larger listed general insurers with operations in Australia and New Zealand as well as the Australian operations of international groups and smaller fintech businesses. The Australian market has improved with premium growth in FY20 and 21 but remains competitive with smaller aggressive challenger brands. Two of these operate in New Zealand alongside TWR as do two major insurers. TWR is trading on a lower Price/Book Value than the three large companies at 0.81x versus IAG (2.04x), SUN (1.18x) and QBE (1.40x).</p>
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Tower Ltd
Focused on sustainable growth and earnings





Tower Limited is a New Zealand-based general insurance company. Tower’s insurance operations are focused on New Zealand and the Pacific region. The group offers car, home &amp; contents, business, travel and boat insurance. Over the last few years, Tower has resolved a number of legacy issues following the Christchurch earthquake, and also embarked on a strategic direction of digitalisation and simplification, including changes to its IT systems and legal structure. Tower recently acquired Youi NZ, Club Marine and ANZ Bank’s rights over a portfolio underwritten by Tower for $14m. TWR was well prepared for the impact of COVID in FY20 and in FY21 remains well capitalised (3x regulatory minimum at HY21) despite recent disaster-related claims and a reduction in FY21 guidance. Tower is focused on sustainable growth and earnings through enhanced insights from data to inform its digitisation agenda both in New Zealand and the Pacific region. The company is leveraging partnerships that allow the business to scale and further expand its product offering.





Business model Tower has a market share of approximately 9% of the New Zealand general insurance market and offers general insurance products in NZ. The company has repositioned over the last few years to become a cloud-based digital challenger brand in New Zealand. The transformation leaves the company with more efficient operations and the potential to substantially lift returns on capital. However loss rates in some classes combined with COVID impact and some weather events have been challenging headwinds in FY21.
With growth come returns? In May 2021 the company reduced full year guidance due to higher frequency of large house claims (mostly fire), lower-than-expected investment returns, higher-than-expected large events and emerging inflation in claim costs. Severe floods on New Zealand’s West Coast have not caused the company to update guidance with the full year result due in November.
Tower needs an improved track record but isn’t overvalued TWR competes directly with the larger listed general insurers with operations in Australia and New Zealand as well as the Australian operations of international groups and smaller fintech businesses. The Australian market has improved with premium growth in FY20 and 21 but remains competitive with smaller aggressive challenger brands. Two of these operate in New Zealand alongside TWR as do two major insurers. TWR is trading on a lower Price/Book Value than the three large companies at 0.81x versus IAG (2.04x), SUN (1.18x) and QBE (1.40x).













Tower Ltd: Focused on Sustainable Growth and Earnings

New Zealand

TOWER Limited provides risk insurance and wealth management products and services. The Company operates in general insurance, health & life insurance, and investments and funds management.

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