Someone watching the rain radar?
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Someone watching the rain radar?
Id expect some claims but so far everything is holding together.
They will pay that dividend & the next one imo. There’s enough balance sheet capacity & underlying earnings to do so.
Issue with Tower is the state of the insurance industry & the recurring ‘one-offs’ which many investors would now view as normal.
https://www.nzherald.co.nz/nz/wild-weather-hits-new-zealand-heavy-rain-flooding-fears-for-christchurch-canterbury/CE5ZG7CIANC6WBPJWBUEOC4O2Y/
So Tower comes across as a company with volatile earnings & with the latest results, as a company with limited earnings growth potential.
Unfortunately, as per my previous post on this on 18 May, with the ever increasing effects of climate change extremely unusual weather events like the rain affecting Canterbury this weekend are going to be more and more frequent to the point where they become so regular they become normal. Not a good sector in my opinion.
I can't take any credit for this insight as I was very fortunate to have a very loyal client who worked on contract for Metservice for over 50 years. Lovely old chap and the last time I saw him when he retired he told me, don't believe all this one in 100 year weather event nonsense. You'll get at least one, more often two of these so called one in one hundred year weather events every year. He went on and told me some other really scary stuff....basically the amount of methane now being released from ice sheet melting means we are on an irreversible road to catastrophic climate change irrespective of what we do with CO2 emissions. https://cage.uit.no/2021/04/28/metha...ng-ice-sheets/
If there were 20 distinct locations within the country, a 1 in 100 event should happen to the country every five years. There are multiple types of events that are individually described by there frequency, so you get back to an event every few years. Start considering 1:20 year events and a year without something should be the exception.
Across the country seeing regular (but not super regular) infequent events shouldn't be a problem if Tower has done the underlying risk maths correctly. Some risks vary by location and Tower is at least some of the way towards higher premiums where there is a higher claim risk.
Tower said as it was experiencing higher call volumes than usual, due to the state of emergency in Ashburton, it was asking people from other areas with non-urgent inquiries to lodge their claims online through the My Tower app, or via its website.
“We hope everyone is keeping safe. Make sure to take extra care on the roads or avoid driving if possible, and if water has entered your house, make sure to turn the power off,” it said in a Facebook post.
https://www.stuff.co.nz/business/mon...for-some-weeks
Insurance companies made huge fortunes over the years ‘investing’ the premiums in oil / coal and other ‘evil’ companies which are to blame for climate change
Now they bemoan more regular climate change induced big events etc etc and having to manage the risks around them.
Certain irony ...but at the end of the day I suppose we all pay the penalty
Am I the only one who thinks we should be provided with a claims update following the Canterbury floods?
Claims are still being lodged, adjusters reporting, quotes being obtained and approved. It doesn't all get confirmed in a few days or even a week. Even with work underway invoices will be sent back to HO for payment and that adds a bit more time. Typically it's not worth reporting on claims under they are in (or close to) a finalised state to get an accurate understanding of costs.
Flooding claims aren't nearly as costly as fire or other large events. Modern carpets are relatively easy and cheap to replace, and a lot of furniture and interiors can be dried out and salvaged with modern industrial blowers. We'll see in due time.
Oh dear, just when things were looking bright, a second downgrade. Glad I cut my losses and sold out at first downgrade release. They sure have some bad luck on their side.
GLTAH.
I've worked in the insurance industry and quite frankly, if I was an underwriter, I'd take the whole Sth Is. off my book.
But it doesnt work like that ... scale is critical. I think Scrunch is right saying any one place may only experience a one in a hundred every hundred years but that still gives for a lot of disasters over all the possible locations. But yeh I know what we are all thinking about risk. Its riskier than we think!!
Looks like an average of around $20k per Canterbury rain event claim is anticipated ( combination of motor, contents and house policies - less any excess ) with perhaps a few more than the 164 currently lodged. Tower claim just over 9% of national general insurance policies in force, with a bias to motor. I wonder what proportion of claims for this event are held by Tower? Suggests around 2000 residential/motor insurance claims will be generated overall by this event across the industry. Of course much damage will be uninsured/uninsurable so losses much higher.
"8% increase in claims cost due to building costs"
https://www.pressreader.com/category/business/en/nz