Tower secures reinsurance reinstatement cover after NZ flood & weather losses

Tower Limited, the New Zealand based insurance company, has now secured reinsurance reinstatement cover to provide protection for a potential fourth event recovery from its program, after the company announced increased loss estimates for recent severe weather events in the country.

As we reported before, Tower had expected its excess-of-loss catastrophe reinsurance would be triggered by the Auckland NZ area severe flooding and cyclone Gabrielle, anticipating it would blow through the retention of $11.875 million of losses per-event before that cover attached.

Then, Tower has increased the loss estimate for the Auckland and Upper North Island floods and severe weather to between $195 million and $225 million, meaning at the upper-end roughly $213 million could be recovered from its excess-of-loss reinsurance partners.

On Cyclone Gabrielle, Tower estimated a further $63 million in reinsurance recoveries, based on an estimate the financial impact of this event would be within the range of $55 million to $75 million.

Overall, Tower was expecting to make reinsurance recoveries of as much as $276 million, should both loss event estimates move toward the top-end of those ranges.

The insurer said it would try to add coverage for a potential fourth loss event, already having the reinstatement in place to ensure full protection for a third catastrophe event, but lacking it should another occur after the flood loss estimates increased.

Now, the insurer has secured that extra reinstatement protection, saying that it has “successfully placed additional reinsurance reinstatement cover for the remainder of the financial year ending 30 September, 2023.”

An additional purchase of $100m of cover reinstates reinsurance protection for a fourth catastrophe event up to $889m in the financial year, on top of the already in place third event cover it had already in place.

The company also said it has sufficient reinstatement cover in force for cyclone Gabrielle.