Tower says summer storms will cost about $5 million
By Sophie Boot
Feb. 13 (BusinessDesk) - Auckland-based insurer Tower said recent storms will have a financial impact of about $5 million after tax.
The company said it received about 300 claims as a result of the New Year storms, and estimates that will cost it between $1.4 million and $1.8 million after tax. It has received 150 claims as a result of ex-cyclone Fehi, which hit the South Island earlier this month, and says the financial impact of those will be between $2.2 million and $3.2 million after tax.
Tower said it is too soon to know the extent of the damage done by Cyclone Gita, which hit Tonga last night having already passed through Samoa and American Samoa and may yet impact Fiji.
However, the insurer said it has a non-catastrophe reinsurance program meaning it absorbs the first $7 million of before-tax losses and reinsurance then covers the next $10 million, up to $5 million per event.
"Weather events in New Zealand may have already reached $7 million," Tower said. "Should damage from Tropical Cyclone Gita exceed $5 million, Tower may be exposed to a further $3.5 million after tax, prior to catastrophe cover commencing. Tower retains full catastrophe cover of $798 million, plus appropriate back-up cover."
The shares last traded at 65 cents, down 28 percent from a year earlier. The stock pulled back sharply last year after the Commerce Commission declined a proposed merger with major insurer Vero New Zealand in July. A High Court appeal of that decision was scheduled to begin early this year but this was abandoned.