AM Best Affirms Credit Ratings of Tower Limited

2026-04-24 · Source: The AI Journal · Field: Finance & Economics — Banking & Financial Services, Capital Markets & Investment Management, Insurance & Risk 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 insurer, with a stable outlook. The ratings are based on Tower's "very strong" balance sheet strength, supported by risk-adjusted capitalisation at the strongest level in fiscal year-end 2025 and expected healthy regulatory solvency. The company's operating performance is assessed as "adequate," demonstrating 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 non-life insurer with a solid market position in New Zealand and Pacific Islands, and its enterprise risk management (ERM) is deemed "appropriate," although it is actively addressing historical regulatory compliance issues and customer remediation.

Key takeaway

For investors evaluating insurance sector opportunities, Tower Limited's affirmed A- (Excellent) ratings and stable outlook indicate a financially sound entity with strong capital and adequate operating performance. Your due diligence should consider its robust risk-adjusted capitalisation and prudent reinsurance, while also noting its ongoing efforts in customer remediation and strengthening internal controls following past regulatory issues. This suggests a stable, albeit evolving, risk profile.

Key insights

Tower Limited maintains strong credit ratings due to robust capital, adequate performance, and appropriate risk management.

Principles

• Risk-adjusted capitalisation underpins financial strength.
• Operating performance can be adequate despite volatility.
• Regulatory compliance is a key ERM focus.

In practice

• Monitor BCAR for capital adequacy.
• Assess combined ratio for underwriting performance.
• Review ERM for regulatory compliance.

Topics

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

Best for: Investor, Consultant, Executive

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