Combined ratio swung 22 points to 79%, restoring underwriting profit

The BAU claims ratio improved to 48.1% from 55.5%, the management expense ratio to 31.4% from 32.2%, and net investment income added NZ$7.2m year-on-year.

Reported PBT was NZ$102.7m versus NZ$7.4m, and NPAT NZ$74.3m against a NZ$1.2m loss; management's underlying NPAT was NZ$83.5m versus NZ$7.1m. Insurance revenue of NZ$555.8m sits on an IFRS 17 basis against NZ$725.2m of FY23 total revenue under the prior basis, so the top line is not like-for-like; management disclosed 15% underlying GWP growth. Operating cash inflow rose to NZ$145.2m from NZ$10.0m, the adjusted solvency margin more than doubled to NZ$171.4m from NZ$79.8m, and a 6.5cps final dividend takes the FY24 total dividend to 9.5cps after no FY23 dividend.

The 22-point improvement reflects both a lower BAU claims ratio (48.1% vs 55.5%) and a much lighter large-event load — FY23 carried a 13.4% large-event cost ratio, which is largely absent from FY24's headline. Rate action and motor-theft underwriting changes are repeatable; the catastrophe-light backdrop is not.

Capital position rebuilt enough to fund a dividend and a flagged buyback. Adjusted solvency strengthened to NZ$171.4m from NZ$79.8m alongside pre-lease FCF of NZ$142.8m, which is above Annolyse's historical baseline (mean NZ$75.6m, range NZ$7.5m–NZ$142.6m). This funded the resumption of dividends at 9.5cps for the full year and underpins the foreshadowed capital-return programme.

The balance sheet contracted materially in size. Total assets fell 32.9% to NZ$635.1m and total liabilities fell 57.4% to NZ$275.0m, while equity rose 19.9% to NZ$360.2m. Part of this reflects the IFRS 17 measurement basis and reinsurance settlement flows from FY23 catastrophes, so the contraction is presentation-affected rather than purely economic.

Against the company's stated combined-ratio target of below 86%, the FY24 outcome of 79% prints comfortably ahead, but mostly because of a calm large-event year rather than a structural step-down. HY24 contributed about 48.5% of full-year insurance revenue and NPAT, suggesting roughly balanced halves rather than a back-end-loaded shape.

The release flags a capital-return programme expected to be EPS-accretive, but mechanics, timing, and quantum are not in the supplied materials. The FY25 capital-management shape and the assumed normalised large-event load are therefore the two largest unconfirmed inputs to any forward read.

The 48.1% BAU claims ratio reflects operational decisions — rate adequacy, motor-theft underwriting changes, and claims-process improvements — and the 31.4% management expense ratio reflects cost-base discipline. Both are repeatable.

The remainder is cycle-aided. FY23 carried a 13.4% large-event cost ratio; the materially lower large-event load in FY24 mechanically reduces the headline combined ratio and inflates the insurance service result. Reinsurance recoveries of NZ$91.6m also feature in the year's cash mix, so the NZ$142.8m pre-lease FCF — above Annolyse's historical baseline — partly reflects catastrophe-recovery timing rather than recurring underwriting cash. PBT and NPAT growth percentages are not analytically clean because the prior base was near-zero and IFRS 17 first-time adoption changes both measurement and presentation; the underlying NPAT bridge of NZ$83.5m to reported NZ$74.3m gives the cleaner economic read. The NZ$3.4m discontinued-operation gain in FY24 (versus a NZ$3.6m loss in FY23) accounts for a small portion of the NPAT swing.

This briefing cannot assess Tower's forward catastrophe budget, the terms of its reinsurance programme, or the precise mechanics of the proposed capital return.