Tower Insurance, the New Zealand insurer that is in the process of selling itself, has reported that loss creep due to the 2010 and 2011 Canterbury earthquakes, plus impacts from the Tasman Tempest storm, the Kaikoura earthquakes and recent storm events will result in further reinsurance claims being made.
Tower reported this morning that it is making a further provision for the Canterbury earthquakes, with a $9.8 million hit to its first-half to 31st March profits.
At the same time the insurer revealed that it has $2 million remaining on reinsurance for the 2010 Canterbury earthquake event, $255.7 million for the June 2011 event and $486.6 million for the December 2011 event.
It has exhausted its catastrophe reinsurance for the February 2011 Canterbury earthquake though, so no further claims can be passed onto reinsurers from that event (which was the most severe of the cluster).
Tower also revealed hits from a number of severe weather and catastrophe events during the half-year, some of which have resulted in erosion of its aggregate deductible.
The Kaikoura earthquake has resulted in a $7.2 million hit in the period under review, while a further $3.6 million of lost profit was down to the Port Hill fires and the so-called Tasman Tempest storm (which has been pegged at a $47.1 million industry loss by the Insurance Council).
Tower noted that weather events during the half-year, including the Port Hills scrub fires and rain storms in Auckland and the North Island, had “contributed to Tower’s aggregate loss reinsurance programme excess being reached.”
Because of this, Tower says that the early April flooding in New Zealand is now covered by its aggregate reinsurance program, up to a maximum of $5 million. If the claim costs for this rainfall event exceed $5 million Tower will take a hit to its full-year profits.
