AM Best Affirms Credit Ratings of Tower Limited

2026-04-24 · Source: The AI Journal · Field: Finance & Economics — Insurance & Risk Management, Capital Markets & Investment Management · Depth: Intermediate, quick

Summary

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) for Tower Limited (Tower), a New Zealand-based non-life insurer. The outlook for these ratings remains stable. This affirmation is based on Tower's "very strong" balance sheet strength, supported by risk-adjusted capitalisation at the strongest level at fiscal year-end 2025 and expected to remain at least "very strong" over the medium term. The company also demonstrates "adequate" operating performance, with a 23.5% return-on-equity and an 81.4% net/net combined ratio in FY 2025, despite some volatility from catastrophe events. Tower maintains a "neutral" business profile as a medium-sized insurer in New Zealand and the Pacific Islands, holding a solid market position in its core segments. Its enterprise risk management is assessed as "appropriate," with ongoing efforts in customer remediation and internal control strengthening following a regulatory investigation.

Key takeaway

For investors evaluating insurance sector stability, Tower Limited's affirmed A- (Excellent) credit ratings from AM Best signal a robust financial position and consistent operating performance. Your assessment should consider the company's "very strong" balance sheet and "adequate" operating results, which are expected to continue. However, be aware of the ongoing regulatory compliance focus and the company's efforts in customer remediation, which could impact short-term operational overheads. This affirmation suggests a stable outlook for Tower's financial health.

Key insights

Tower Limited's credit ratings are affirmed "A-" due to strong capital, adequate performance, and appropriate risk management.

Principles

• Risk-adjusted capitalisation underpins financial strength.
• Operating performance must balance technical results with investment income.
• Effective ERM includes regulatory compliance and internal controls.

In practice

• Maintain strong risk-adjusted capitalisation via earnings retention.
• Implement prudent reinsurance and conservative investment strategies.
• Actively address regulatory compliance and strengthen internal controls.

Topics

• AM Best Ratings
• Tower Limited
• Financial Strength
• Risk-Adjusted Capital
• Operating Performance

Best for: Investor, Consultant, Executive

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Editorial summary, takeaway, and curation by AIssential. Original article published by The AI Journal.