Tower (NZE:TWR, ASX:TWR) is expected to post an underlying profit of NZ$94 million in fiscal year ending September, up from NZ$83.5 million in fiscal year 2024, interest.co.nz reported on Thursday, citing Forsyth Barr's report.

According to the report, the insurer's risk-based pricing model is deemed its most defensible edge, as it's actively off-risking high-theft car models and focusing on insuring lower-risk properties, reshaping its insurance book.

Tower's Management Expense Ratio (MER) is expected to fall to about 30% within the fiscal year, supported by digital efficiencies and scale, the report added.

Forsyth Barr analysts expect Tower to achieve 18.8% return on equity by 2027, aligning with its own guidance and outperforming regional peers.

The report notes a "positive step-change" in Tower's earnings base, projecting normalized fiscal year 2026 earnings of NZ$61.8 million under typical weather conditions.

Forsyth Barr has rated Tower as outperform.

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