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 is stable. This assessment reflects Tower's "very strong" balance sheet strength, underpinned by risk-adjusted capitalisation at the strongest level at fiscal year-end 2025, with expectations to remain at least "very strong" over the medium term. The company's operating performance is deemed "adequate," showing 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 with a solid market position in New Zealand's core insurance segments, and its enterprise risk management (ERM) is assessed as "appropriate," despite recent regulatory scrutiny and a penalty payment for historical misleading representations.

Key takeaway

For investors evaluating insurance companies in New Zealand or the Pacific Islands, Tower's affirmed A- (Excellent) ratings indicate a stable financial outlook. Your due diligence should consider its very strong balance sheet and adequate operating performance, while also noting the ongoing customer remediation and internal control strengthening efforts following recent regulatory findings. This suggests a company with fundamental financial stability actively addressing compliance challenges.

Key insights

Tower Limited maintains strong financial ratings despite past regulatory issues, driven by robust capital and adequate operating performance.

Principles

• Risk-adjusted capitalisation is key to balance sheet strength.
• Operating performance can be adequate despite catastrophe volatility.
• Regulatory compliance is critical for ERM assessment.

In practice

• Monitor risk-adjusted capitalisation using BCAR.
• Implement prudent reinsurance programs.
• Strengthen internal controls for regulatory compliance.

Topics

• AM Best
• Tower Limited
• Credit Ratings
• Financial Strength Rating
• Enterprise Risk Management

Best for: Investor, Consultant, Executive

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