Tower won't pay a dividend this year as planned as the cost of covering wild weather claims across the Pacific and a settlement with its reinsurer kept the firm in the red.

The insurer had planned to resume paying dividends this financial year, but now says that will happen next year when its transformation programme is expected to boost earnings.

The board suspended dividends to preserve capital in 2016 as the firm contended with escalating costs from the Canterbury earthquakes. The shares were down 1.3 per cent to 74 cents, and are up 9.6 per cent so far this year.

Tower today reported a net loss of $6.7 million in the 12 months ended September 30, narrowing from a loss of $8m a year earlier. That included a $16.2m charge on its settlement with reinsurer Peak Re over a dispute relating to its 2015 adverse conditions cover. Tower had received about half of what it claimed.

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Stripping out one-off impacts, Tower's underlying earnings still fell, down 24 per cent at $13.6m as cyclones in the Pacific and storms in New Zealand added an $11m bill in large claims costs.

"The past two years have seen a number of unprecedented and severe weather events that have impacted communities and the business beyond expectations," it said.

"Tower is putting in considerable effort and taking all appropriate steps to preserve capital and reduce any volatility from these short-term weather abnormalities."

The insurer increased its reinsurance cover for the 2019 financial year, doubling its aggregate cover to $20m and lifting the excess by $3m to $10m.

Tower's net claims expenses rose more generally, up 14 per cent to $141.2m, due to a number of claims challenges, which the firm is addressing through increased prices and tightening its underwriting criteria.

Gross written premium rose 7.6 per cent to $336.1m as it added customers and increased prices.

Tower is optimistic its changes will bear fruit in the coming year, projecting underlying earnings of at least $22m in the 2019 financial year. That assumes the firm's revenue growth will be sustained and that margins improve as a result of underwriting and pricing changes. It also anticipates a more normal contribution from the Pacific unit and containing costs.

The board plans to pay out 50 per cent to 70 per cent of reported net profit in 2019.

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Part of Tower's transformation has been the construction of a new IT platform to replace what had been a fragmented and complicated backbone. It spent $19m on software development in the year and has $13.9m of capital commitments to implement and deliver a new insurance policy management system.

It wants 50-to-70 per cent of all transactions done online to simplify its business and strip out costs. About 45 per cent of Tower's new business is coming through online channels.

Tower continued to work through its remaining Canterbury quake claims, with 163 still open as at September 30, down from 323 at the start of the year. During that period Tower received 115 new claims from the Earthquake Commission and 43 other claims were reopened. Gross outstanding claims were estimated to be $72.9m and Tower increased provisioning by $3.6m in the period, which also weighed on the bottom line.

The firm received 16,152 claims from the Canterbury quakes and has paid out $869m to customers. It estimates gross incurred claims will total $905.8m from the four main events, which have had a $152.5m cumulative impact on Tower's net profit.

Tower's solvency margin was $78m, $28m above the Reserve Bank's required level and equivalent to 234 per cent of minimum solvency capital.