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Positive trading conditions – including those influenced by better-than-expected weather – have prompted New Zealand-based insurance company Tower Ltd (ASX:TWR) to raise its guidance on underlying net profit after tax (underlying NPAT) for the year ending 30 September 2024 to $40 million.
This was a rise from a previous advised earnings guidance figure of $35 million.
Unseasonably good weather in New Zealand was one of the key factors in the upgrade: although the country experienced two storms in the month of May, they yielded relatively insignificant claims costs for Tower, falling short of the threshold for large events.
The company’s large events allowance for the 2024 financial year is set at a conservative $45 million, and Tower expects this to be fully utilised – with this assumption forming part of the upgraded guidance.
However, there have been no large events recorded in the financial year to date, and the underlying NPAT is set to increase in-line with the amount of the allowance which remains unused at the end of the year.
This means that NPAT could potentially rise by another $32 million (or $45 million less tax) if the company ends the year without a large event.
Tower has been trading at 78.7 cents.
