Tower slashes its FY23 NPAT guidance

Nick Sundich Nick Sundich, May 8, 2023

Tower (ASX:TWR) is another insurer that has been feeling the pinch from catastrophic weather events. The company has been hit by claims from Cyclone Gabrielle as well as two further cyclones that have hit Vanuatu.

 

No time to do stock research, but you still want to invest?

 

Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.

 

GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY

 

Tower hit with claims

Tower was hit with over 3,000 claims from Cyclone Gabrielle and anticipates a $55-$75m cost when all is said and done. A further 5,550 claims have come in from the Auckland and Upper North Island Weather event, leading to a $195-$225m cost. Vanuatu’s cyclones have led to another 250 claims with a $10m net financial impact after proportional reinsurance.

In all instances, costs above $11.9m will be covered by Tower’s reinsurance for catastrophic events, which provides up to $889m of catastrophe cover.

 

FY23 NPAT guidance slashed

Tower previously guided to a $18-$23m NPAT for FY23 – the 12 months to September 30, 2023. But given these events, this guidance was slashed. The company is now expecting $8m-$13m for the full year and a loss for H1 of around $3m.

The company told shareholders it would take a number of steps to minimise future losses, including that it wouldn’t pay an interim dividend and has increased its large events allowance from $40m-$50m. Shares fell by nearly 10% this morning.

 

Tower (ASX:TWR) share price chart, log scale (Source: TradingView)

 

Some good news was that it upgraded its gross written premium (GWP) growth from 10-15% to 15-20%, as more people seek protection. But whilst this is a blessing for now, in the form of short-term revenues, it could be a curse down the track if catastrophic weather events continue in the South Pacific.

 

Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.

 

GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY

 

There’s no credit card needed – the trial expires automatically.

 

 

Blog Categories

Get Our Top 5 ASX Stocks for FY25

Recent Posts

Telix Pharmaceuticals on the Nasdaq

Telix Pharmaceuticals (ASX:TLX): It’s made ~A$1.7bn in revenue from Illucix, but here’s why the best is yet to come!

What would you have thought if you were told 5 years ago you would see Telix Pharmaceuticals as a successful…

anti woke ETFs

Anti Woke ETFs: Do they practice what they preach and have they outperformed since Trump’s return to power?

Have you ever heard of so-called ‘Anti Woke ETFs’? If you’re sick of companies that are big on ESG, this…

Trump Tariffs

Trump’s Tariffs Are Back in the News—What’s the Impact on Global Supply Chains?

In recent months, the conversation around trade tariffs has re-emerged, with former President Donald Trump’s trade policies making headlines once…