Tower lifts catastrophe limit to NZ$800mn in 2025 reinsurance renewal
New Zealand insurer Tower has successfully renewed its reinsurance program for the 2025 financial year with an increased catastrophe limit, citing “competitive rates” from carriers on the placement.
In a stock exchange filing on Monday, Tower said it had secured comprehensive cover for its home, motor, boat and commercial portfolios across New Zealand and its Pacific markets.
The cat limit for the FY25 reinsurance program has increased to NZ$800mn ($500mn), up from NZ$750mn in 2024, while available cover for a third catastrophe event has expanded from NZ$75mn to NZ$85mn.
Tower's catastrophe reinsurance excess under the renewed program is NZ$18.75mn for the first two events, up from NZ$16.9mn in FY24 due to expiring multi-year arrangements.
An excess of NZ$20mn applies for a third event in FY25, unchanged from the prior year.
Tower – which is listed on both the NZX and ASX – estimates it will pay 11.7 percent of total income for reinsurance cover in FY25, down from 13.9 percent in FY24.
CFO Paul Johnston said Tower's reinsurance arrangements are designed to provide financial protection from large events volatility and maintain financial flexibility to support growth, while underpinning strong solvency.
“Tower’s focus on risk-based pricing combined with our dynamic rating ability helped us secure favourable terms for our FY25 reinsurance. We’ve further strengthened relationships with global reinsurers, with several agreeing to new multi-year arrangements, which provides greater long-term certainty of reinsurance costs and catastrophe excesses,” he said.
Johnston added: “We’re pleased to have secured a comprehensive reinsurance program with stable excesses and pricing. This will help Tower maintain competitive pricing for customers.”
The insurer in August updated its profit guidance for its 2024 financial year amid a benign weather environment and positive trading conditions in New Zealand.
The carrier disclosed that it now expects underlying net profit after tax for the financial year ending 30 September 2024 to be greater than NZ$45mn, an increase on previous guidance of more than NZ$40mn.
Tower said it had seen stronger-than-expected “business as usual” claims performance since its guidance update in June, which it attributed to targeted underwriting actions tackling the impacts of vehicle thefts and to "unseasonably benign weather" in New Zealand.
Gross written premium growth is expected to be at the top end of, or exceed, current guidance of 10 percent to 15 percent.