TWR - Tower Insurance.

[Poet]

Not exactly, they are going to top up their catastrophe insurance. How much will that cost?

Is it just me, or does $934m of yearly catastrophe cover seem a bit inadequate anyway? I know EQC cover is increasing to $300k but that's still not a lot of houses.

The $200k + GST applies to all houses so from TWRs perspective, not important.

Also remember Tower has not had an annual result in 12 years unaffected by "one-off" unexpected, unbudgeted cost increases from the Christchurch earthquakes. Despite every year adding excess contingencies over and above the actuarial estimates. There are STILL open claims relating to it.

Yes, but still paying 10% + gross dividend so, as costs increase, so do premiums - TWR are a ticket clipper ie in the long term, the higher the claims the more the profits.

EQC's Natural Disaster Fund btw is only $250m with $7.2b of reinsurance. Only enough to cover 25k claims for the full $300k.

Sure, but 25000 claims at 300000 is quite a bit of cover, anyway that's not TWR's problem is it? TWR needs to pay claims above the EQC limit (and, interestingly, under the new arrangements TWR gets paid to administer the EQC claim, so in a moderate earthquake TWR will actually be earning $$

[Jaa]

Sure, but 25000 claims at 300000 is quite a bit of cover, anyway that's not TWR's problem is it? TWR needs to pay claims above the EQC limit (and, interestingly, under the new arrangements TWR gets paid to administer the EQC claim, so in a moderate earthquake TWR will actually be earning $$

TWR are definitely not just a ticket clipper. There is a material risk they will collapse in a heap once their reinsurance and reserves are used. They came close to doing exactly that after the Christchurch earthquakes. Hindsight shows shareholders would have been better off letting them and investing in the NZ50 index rather than bailing them out like they did.

As for EQC, the premiums should be higher to rebuild the fund. The taxpayer is clearly subsidising home owners.

[nztx]

https://www.stuff.co.nz/national/wea...in-in-24-hours

Cyclone Gabrielle could hammer Coromandel with up to 300mm of rain in 24 hours


it might be getting a bit fine to book swimming lessons at this late point - folks

[nztx]

https://www.nzherald.co.nz/nz/weathe...CIQGY3D6FD56M/


Weather, Tropical Cyclone Gabrielle: Auckland mayor extends state of emergency, MetService gives warnings of 150km/h winds, 300mm rain

MetService’s head of weather communication, Lisa Murray, said: “If the cyclone continues on its current path towards the north of Aotearoa New Zealand, we can expect this to be an extreme weather event with widespread damage.

“Those areas that are already vulnerable following last week’s weather are expected to see more rain, strong wind, heavy swells and coastal inundation which will exacerbate the situation.”

Murray urged people to not forget a cyclone brings severe damaging wind as well as heavy rain and swell.

“As the ground is already sodden trees are more likely to topple which could cause power outages.”

[bull....]

at the end of the day all it means is insurance companies will not insure at risk property going forward and will increase premiums on everyone else ( more premiums depending on your risk situation )

only have to look at suncorp's result the other day to understand how they continue to make nice profits

the new risk factor for individuals when buying property now will be will this property get insurance in the future. if you owned one of these properties you might want to consider selling before they become worthless

[Balance]

at the end of the day all it means is insurance companies will not insure at risk property going forward and will increase premiums on everyone else ( more premiums depending on your risk situation )

only have to look at suncorp's result the other day to understand how they continue to make nice profits

the new risk factor for individuals when buying property now will be will this property get insurance in the future. if you owned one of these properties you might want to consider selling before they become worthless

TWR is a small bit industry player unlike the big boys so will continue to play catch up on premium levels as the disasters unfold.

I am glad I sold out and book my small gain when that became clear in 2021.

[Scrunch]

Sure, but 25000 claims at 300000 is quite a bit of cover, anyway that's not TWR's problem is it? TWR needs to pay claims above the EQC limit (and, interestingly, under the new arrangements TWR gets paid to administer the EQC claim, so in a moderate earthquake TWR will actually be earning $$

A lot of those claims will be car and contents. Not all the car claims will be writeoff's. Some of the house claims will be modest costs, for example a smaller retaining wall falls over and needs rebuilding. Thousands - yes. Hundreds of thousands - no. They do however know its big enough to trigger reinsurance.

[ronaldson]

Yes, but they already have prepaid cover for a 2nd catastrophe event up to another $889m subject to the $11.875m excess deduction. And they are seeking to put one further 3rd catastrophe cover in place to replace the first one now acknowledged to be triggered. That will require additional reinsurance expense but is a prudent response to current circumstances. In FY22 reinsurance premiums took 15.9% of premium income. In FY23 they spent 13.6% of anticipated premium income, so the 3rd event cover cost has a bit of headroom.

Tower has previously used policy pricing to effectively reduce its historic ratio of exposure to property damage in the Wellington Region. And it is in the early stages of doing so with regard to flood damage potential across the board. The necessary capping of any catastrophe cover event at some defined sum is the ultimate judgement call and TWR was underweight for ChCh in 2011. Perhaps not much has changed in that regard?

But really it is EQC who have dropped the ball and left the taxpayer with significant exposure. Their bucket has now leaked to practically empty.

[nztx]

https://www.stuff.co.nz/business/mon...r-says-quashed

Cost of house insurance has increased 17% in one year, says Quashed


and much more on the way likely to be added

[ronaldson]

TWR share price holding up remarkably well considering. Still, the announcements just in regarding the circumstances in HB are concerning. Not only property damage outcomes to worry about but now business interruption policies too. And what about boats, travel insurance et al.

Plus I can't help thinking that some of the MV losses/write offs due to flood damage seem to be due to heedless behavior and/or failure to take sensible precautions.

There won't be enough assessors to keep up so it will take time to understand the impact but no doubt the 2nd catastrophe cover has been well and truly triggered! Let's hope the cap holds!