TWR - Tower Insurance.

**Poet** · 18-12-2020, 12:59 PM

I guess this isn't anything particularly unexpected for Tower, cyclones happen regularly.
95% of Fiji houses don't have cyclone cover and those that do are required (By Tower, at least) to have an engineer's certificate as to the appropriate construction. Also requires home owners to have cyclone shutters fitted and closed during the currency of storm warnings.

Tower also doesn't appear to cover damage from storm surges or flooding associated with cyclone even when house is insured

Nothing complements a home like security and peace of mind. A strong house is a safe house that will protect your property, your possessions but most importantly, your family. No matter the weather, homes should be built to last and endure any season.

In Fiji, where the last cyclone season saw eight pass through the region, a house that can withstand damaging conditions is necessary and worth the investment.
For your home to be rated cyclone-certified it needs an engineer certificate stating the house can withstand cyclones.
This requires that your home’s structural design and build is in accordance to wind load standards, and only then can your home be accordingly cyclone-certified and insured.
Such building standards significantly reduce the effects of cyclones. With Cyclone Winston, we saw a vast difference in the damage experienced in homes that were built to this standard compared to those that weren’t.
It’s important for home owners to understand that cyclone-certified houses are safer.
They are not just a channel for house insurance, but will firstly serve their purpose of protecting your family and property, your most important assets.
Therefore, it is a crucial investment to have your property built to standards that will protect them.
At a rare Category-5 rating, Tropical Cyclone Winston destroyed homes that were cyclone-certified. Home owners who invested in cyclone cover with TOWER Insurance were financially cushioned.
Insurance provides additional peace of mind to those who build their treasured homes to a standard that can withstand cyclones.

No doubt there will be costs, and Tower will advise shareholders in due course, I'm not expecting the costs to be all that significant (I could be wrong though)

GLTAH

**winner69** · 18-12-2020, 01:31 PM

Harold in April this year seemed to have an adverse impact on Towers financials (v forecast)

No idea whether this is a similar event

**nztx** · 18-12-2020, 03:01 PM

Has the Head Honcho contingent's apetite at TWR's board table run out of buying puff ?

or perhaps just gone on holiday early to mull over whether Fiji's weather systems will come this way ?

**Scrunch** · 19-12-2020, 09:47 AM

Originally Posted by nztx

Has the Head Honcho contingent's apetite at TWR's board table run out of buying puff ?

Not sure, but given what's happening over at ATM where the insiders were selling a few months ago, I'm pleased to see multiple insiders buying at TWR.

**Balance** · 29-12-2020, 10:26 AM

https://www.rnz.co.nz/news/national/...p-in-hailstorm

https://www.newstalkzb.co.nz/on-air/...ing-hailstorm/

Another month, another weather event for the insurance industry.

"A fruit growers association in Motueka in the Nelson area says yesterday's hail storm may have wiped out so much fruit the labour crisis is somewhat averted.

The association's president says some growers lost their entire crop in the storm.

Richard Clarkson says it will cost "millions of dollars", and the district and entire country would feel the impact."

**Antipodean** · 29-12-2020, 11:58 AM

In generalities... yes more weather events reported, and yet, general insurance seems to be profitable year after year.
Even in NZ where our insurance companies have spent decades being taken over... must be some value in that?

In specificities... I'm not certain Tower has a high percentage of the Motueka fruit growing industry business assets/interruption coverage. Also "millions of dollars" sounds bad... but I suspect Mr Clarkson may be referring to the full economic impact of the lost product. Including sales, employment, rates, costs, knock on effects with other companies etc. Business cover terms and conditions will vary, however unlikely this is all is covered by whomever is insuring said growers.

Most product systems can identify and track weather related events if the company wants to, compare local to international data sets and decide if long term premium rates need to be adjusted in a global or more targeted way.
If identified, can be handled.

Still a question mark hanging over impact of recent Pacific storm, probably more important in my mind to keep an eye on. More of a concrete relationship to Tower's bottom line.
That being said, for disclosure I'm accumulating as the long term story here is appealing to me.

**nztx** · 29-12-2020, 02:05 PM

All sorts of interesting things to play out in TWR's next period reporting now (for more excuses ?)

- Fiji Storm
- Napier Flooding
- Motueka Hail & Storm

Anyone care to bet on how well what many may have hoped looked like sniff of a small dividend
will be well sliced & diced up now on extraordinarily ordinary events .. ?

**Southern Lad** · 29-12-2020, 04:19 PM

I’m not aware that TWR are big in the crop insurance space but assume they will have some exposure to property and motor vehicle damage caused by the hail storms. Hail damage to motor vehicles can be big claim events in the insurance industry. Based on my capital solvency comments below, I don’t think these events will have a significant impact on any decision to pay a dividend in FY21.

TWR undertook a capital raise in late 2019 because the RBNZ refused to allow the disputed EQC receivable to be taken into account for solvency capital purposes. With the claim now settled (albeit for 76% of the carrying amount in the financial statements), my assumption is that this settlement (and profits earned since 2019) means that TWR now has excess solvency capital which leaves it well placed to grow its book (organically or inorganically) or to return surplus capital to shareholders.

My my preference is that TWR has opportunities to invest the capital profitably and grow the business. If those opportunities aren’t available, the capital should be returned to shareholders. The 2020 annual report indicates that TWR has only $271,000 of imputation credits and tax losses that result in a deferred tax asset of $25.7m (if all in NZ this would amount to gross tax losses of approximately $91.8m), so TWR won’t be paying any tax in NZ for quite a few years and therefore won’t be in a position to impute dividends. Surplus capital should therefore be used to undertake an on-market share repurchase or a pro-rata share cancellation (if the applicable tax thresholds can be met). Unimputed dividends are not shareholder friendly!