TWR - Tower Insurance.

[macduffy]

I can't vouch for this but I've read somewhere that Frank O'Halloran, CEO of QBE, has stated that QBE has most of its reinsurance locked in for the next three years. Anyone else seen this?

Doesn't help TWR of course.

PS Here's the link.

http://www.theaustralian.com.au/busi...-1226013758414

[macduffy]

TWR is deferring a decision on a return of capital in the light of increased re-insurance costs following the Christchurch earthquake.

"While the Board will continue to keep TOWER's capital structure under review,
it is not expecting to finalise a decision on a return of capital to
shareholders in the short term."

[shawsie]

Jaa, some thought on your analysis

General Insurance in NZ is easily the most cost competitive of the insurance types. GI runs across the industry on slim margins. Only cost of claim is re-insured, the operating costs will affect performance.

Re-insurers used to think Oz and NZ divsersified their portfolio and set premiums to match but will re-evaluate with 2*quakes, fires, floods and hurricanes. Re-insurance will go up by orders of magnitude as they re-rate.

Tower's re-insurance bar is set low because it has low market share, low exposure, not because of exceptional risk aversion.

Tower's sweet spot is Life and Health cover which run on thick margins. The threat is bank assurance, and players like Sovereign. I would not describe competition as fierce, nor is growth potential. Its an old boys club.

I dont see a lot of upside in value here.

[CJ]

Surely all GI companies will be facing similar increases in costs which will see premiums increase accross the board, maintaining whatever (slim) profit margins they have.

This must only be a one year issue as they obviously can increase premiums for those that have already paid this year but next year, it should be increased.

[shawsie]

Its a 10s of millions gap, and as this is insurance, major events will come along periodically and cause these sorts of blips, and these days the intervals do seem to be getting shorter.. Premium increases give customers a trigger to switch. Why wouldnt you go to AMI?

TWR does however give one of very few ways of including insurance in an NZX based portfolio.

[scamper]

Sold last week, but well after a sensible TA would have quit.
Now, usually I badly stuff up the timing of sells, so there is every probability that twr will bounce soon.
btw
Scamper the dearest dog died last month after 13 years as a faithful co-contributor.
Scamper the person is soooo sad.
Have decided to keep his name in memoriam...
All pretty small stuff considering pike river, christchurch and japan.
Condolences and sympathies to all.

[RRR]

Will the recent developments make it difficult for GPG to sell its stake in the near future for a fair price? It will be interesting to see what the TWR management does in this scenario.

[Jaa]

http://www.nzherald.co.nz/business/n...ectid=10714604

Last few paras

Fidelity would never be able to afford to take over TWR.

BNZ and Westpac are the front runners, lets hope for a bidding war.

Oh and I hope Mr Chaplin wasn't just referring to the rumour about BNZ that I started a few pages back

[Lego_Man]

Edit: Reading comprehension FTL

[CJ]

http://www.nzherald.co.nz/business/n...ectid=10717725
http://www.nzherald.co.nz/business/n...ectid=10717744

Hmmm ... Not thrilled about that !

Why?

My view is that TWR has been competing against AMI which has not been paying for adequate reinsurance. How are companies meant to be able to compete with companys that are determined to be 'too big to fail'.