New Zealand insurer Tower Limited has reported solid growth in Q1 of the 2023 financial year as the company remains resilient following the Auckland & Upper North Island Weather Event, and Cyclone Gabrielle.
In the three months to 31 December 2022, Tower recorded gross written premium (GWP) of $123 million, representing a growth of 12.5% from the same period last year.
The firm’s New Zealand personal lines market share increased to 9.5%, up from 9.2% in the same period last year through a balanced mix of rating and volume. New Zealand risks in force grew to 582,000, an increase of 5% versus the December 2021 quarter.
Tower notes that strong premium growth combined with disciplined cost control saw its management expense ratio improve to 35% from 38% in the same period of 2021.
Meanwhile, the insurer adds that it continues to manage external factors that put pressure on claims costs in through a combination of digital efficiencies, and rating and underwriting changes.
Average motor claims frequency increased to 13%, up from 12% pre Covid due to higher traffic volumes and an increase in motor thefts.
Tower states that these factors have contributed to a claims ratio excluding large events of 54% for the quarter compared to 47% in the same period last year.
Building on its approach to risk-based pricing for earthquake and inland flooding risks, Tower plans to expand its natural hazards model to include landslips and coastal hazards in the full year 2023.
Regarding the Auckland and Upper North Island weather event, Tower has now received around 5,325 claims.
The firm has estimated the ultimate cost of the Auckland and Upper North Island weather event to be within the range of $95m to $125m.
Costs for this event will predominantly be covered by Tower’s reinsurance for catastrophe events which has an excess of $11.875m.
So, after the retention, Tower is set to make a reinsurance recovery of between $83.125 million and $113.125 million as a result of the impacts of the Auckland and Upper North Island weather event.
As for Cyclone Gabrielle, Tower has received approximately 2,200 claims and is in the early stages of estimating its financial impact as further claims continue to be received.
Tower expects Cyclone Gabrielle is likely to also trigger Tower’s reinsurance for catastrophe events, which also has an excess of $11.875 million.
After the impacts of these two events on its reinsurance, and in line with its comprehensive approach to reinsurance, the insurer states that it is progressing with reinstatement cover to ensure it maintains sufficient protection for two additional catastrophe events.
Tower CEO, Blair Turnbull commented, “Tower is focused on supporting customers and communities throughout the recovery from these events.
“We plan for such events, both financially and in our operations. Our continued growth and agility in responding to external challenges positions Tower positively for the future.”
