Insurer boosts reinsurance cover by $50 million
Tower has released details of changes to its reinsurance cover which relate to the February 2011 earthquake.
CEO David Hancock said the company had taken the opportunity through its reinsurance programme to increase the level of cover in relation to the remaining Canterbury rebuild.
Tower said it has now settled and closed 93% (by volume) of all claims related to the Canterbury earthquake events and remained on track to complete 95% by the end of 2015.
“We have secured an additional $50 million in cover at attractive rates for adverse developments associated with the key February 2011 earthquake event,” said Hancock.
“This additional cover limits exposure and maintains financial flexibility should circumstances change, further underpinning strong solvency.”
Tower will retain exposure to the first $30 million in costs above current reserves. However, on the next $50 million in costs Tower will bear only 12.5%, or up to $6.25 million, with the balance covered by reinsurance for the seven year term of the agreement.
“Tower has successfully utilised strong global relationships and improving reinsurance markets to efficiently manage risk,” Hancock said.
“We will continue to take advantage of these opportunities for the benefit of shareholders, where prudent to do so.
“We will also continue to look to invest in the growth of general insurance and return excess capital to shareholders wherever possible.”
The company also noted its capital holdings were well above the Reserve Bank’s current solvency minimum required, with $135 million held at the end of FY2014.
This would allow for an on market share buy back of up to $34 million, which the company said would start after the release of its first-half results on 26 May, subject to final approvals and shareholder notifications.