Wellington: AM Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of New Zealand’s Tower Limited (Tower), with the outlook for both credit ratings assessed as stable. In a statement, the global credit rating agency said the ratings reflected Tower’s very strong balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management.
According to BERNAMA News Agency, the company’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which remained at the strongest level as of the fiscal year ended September 30, 2024. Although the company’s risk-adjusted capitalisation is expected to decline following a dividend payment and share buyback in the first half of fiscal year 2025, it is anticipated to remain at least at a very strong level over the medium term, supported by earnings retention.
The credit rating agency added that Tower’s regulatory solvency capital under the latest Interim Solvency Standard is expected to maintain a healthy buffer above minimum requirements, bolstered by strong financial flexibility, a prudent reinsurance programme, and a conservative investment strategy. Meanwhile, AM Best assessed the company’s operating performance as adequate, noting that it has delivered consistent results despite volatility linked to catastrophe events. In fiscal year 2024, Tower recorded a return-on-equity ratio of 22.6 percent and a net/net combined ratio of 83.1 percent.
Positive underwriting and operating results are expected over the medium term, supported by appropriate risk selection, pricing strategies, and investment returns. Tower, a medium-sized non-life insurer, operates mainly in New Zealand with additional presence in the Pacific Islands, focusing on home and motor insurance distributed through direct channels and partnerships. Despite holding a modest five percent market share in the overall non-life market, Tower maintains a solid position in its core insurance segments in New Zealand.