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Tower tops up Canterbury reinsurance

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Tower New Zealand has added $NZ50 million ($48.9 million) to its reinsurance for remaining Canterbury earthquake claims.

It has settled and closed 93% of claims related to the 2010 and 2011 quakes and remains on course to hit 95% by the end of this year.

CEO David Hancock says risks “continue in regard to increasing costs and time delays”.

The additional cover was secured for seven years “at attractive rates” and is earmarked for “adverse developments” arising from the February 2011 quake.

“This additional cover limits exposure and maintains financial flexibility should circumstances change,” Mr Hancock said.

Tower will retain exposure to the first $NZ30 million ($29.4 million) in costs above current reserves.

On the next $NZ50 million in costs it will bear only 12.5% – or up to $NZ6.25 million ($6.1 million) – with the balance covered by reinsurance.

At the end of 2013/14 Tower held $NZ135 million ($132 million) above the solvency minimum required by the Reserve Bank of New Zealand.

It expects the next stage of its capital management program – an on-market share buyback of up to $NZ34 million ($33 million) – to start following the half-year results announcement on May 26.