Insurer Tower sticks to its guns in pursuit of Peak Re

by Maryvonne Gray 30 Nov 2016

Insurer Tower sticks to its guns in pursuit of Peak Re

An arbitrator has now been appointed in Tower’s battle with reinsurer Peak Re to release $43.7 million of adverse development cover for Canterbury earthquake provisions.

But while some confusion remained around Peak Re’s reasons for denying it, Tower said one thing was certain, it would pursue them for it ‘to the end’.

Tower Board chairman Michael Stiassny and CEO Richard Harding were questioned by analysts and journalists several times on the matter during a telecast yesterday of the insurer’s full year results for 2016.

Initially, Harding said they were currently going through a process of arbitration which was ‘all about getting the two sides’ evidence together’.

“We haven’t as yet seen what their claim is,” he said.

“Their basic claim is to avoid paying and to avoid honouring their commitments. We believe we have a very strong position based on our legal advice and we’re going to pursue that to the end.”

Stiassny interjected with an accusation which has often been levelled at many insurers around Canterbury claims.

“They’re simply slowing down a process either to avoid paying the full amount or to just basically hold us out for as long as they can so that we are interested in a settlement for cash at a shorter period of time,” Stiassny said.

“That is not something that we’re interested in, so we are playing this with a straight-backed bat.”

He said: “The fact that we have it as 100 cents in the dollar on our balance sheet, and we’ve been audited, should give everyone a fairly clear impression of where we sit on this.”

When pressed further for what reasons Peak Re had given for not honouring their contractual agreement with Tower, Stiassny said it was the ‘simplistic position’ that Peak Re had ‘taken on a contractual obligation which they do not wish to meet’.

He later added: “They are aggrieved that there was a very short period of time between them writing that cover and them being liable for it.

“It’s unfortunate in the world that that has happened but they are still liable for it.

“Their issue may be their internal one that they have a problem, not us.”

Tower had earlier revealed it planned to separate all its Canterbury-related liabilities and assets into a spin-off company called RunOff Co.

Harding said there were 564 remaining Canterbury claims, 297 of which were completely new claims received, and 98 were claims that had been reopened.

Of those, 311 were the most complex and challenging to resolve.

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  • Andrew McKay 5/12/2016 7:19:47 a.m.
    Runoff co will not have enough money to cover claims. Just take a look at the average payout and times by the number of clients, you will see this comes to much more money than Tower plans to put into Runoff. It appears that Towers reinsurers are not the only insurer not wishing to pay out claimants, and wish to delay, deny and defend non payments.
    Take a look at the high court cases, you will see Tower does not want to pay out in accordance with the policy.
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