TWR - Tower Insurance.

[nztx]

They have increased their exposure to a 3rd event in exchange for cheaper full cover of that and a 4th event. Think we can read into this that reinsurance costs have increased materially.

A small increase in the excess for both events of 625k and a share of the risk up to 57.5m which was previously covered by the reinsurers. So the cost of another large event for Tower has gone up from 11.85m to 12.5m + ~6m = $18.5m. An increase in exposure of 56%.

Interesting trade-off/gamble. Probably a smart strategy but shows this insurance business is definitely not just ticket clipping.

How does Cover get cheaper with more of these extreme Weather events ?

Most would assume the opposite to be the case ..

I would love to see the next Insurance Bills reduce markedly - but I will believe it when I see it
which likely wont happen for anyone

How does TWR manage to pull this sort of stunt whilst sucking in vastly rising reinsurance
reimbursements for each of these large events ?

Surely the global reinsurers would be out with red pen sanctioning off frequent flyers in Disaster
prone areas like here & Aussie as more risk becomes apparent ..

[nztx]

Hi Nztx… I’ve noticed you posting storm warnings a lot lately on the TWR thread. If you going to post on the weather …how about you do some reading and get your story right.

Hurricanes are generally a northern hemisphere term…cyclones are what there called down hear in South Pacific.

The cyclone season happens every year in South Pacific between November and april..there is no March/April window.

According to met service FEB is the most likely peak month…so Whilst we might get more storms before end of this season we might get no more particularly as we start to move from warm summer to cooler autumn.

So just like you get your strawberries, asparagus and bluff oysters in a limited season we are likely to get tropical cyclones in a limited season…every year

Have a look at this map on the met site and you will see how few cyclones actually come our way
https://about.metservice.com/our-com...ical-cyclones/


You might be fascinated to know that many sailing boats come to nz from the pacific area every year as their insurance will not cover them in cyclone season or they pay a extra premium for the higher risk

Its sunny with no wind in Auckland today…no chance of a hurricane…good day for TWR shareholders

Thanks for pointing that out Perky .. just seeing how many were awake here

Bear in mind we're keeping what's left of the good stuff here, so dont be surprised when
the limited supply window closes earlier further afield ..

[ronaldson]

They have increased their exposure to a 3rd event in exchange for cheaper full cover of that and a 4th event. Think we can read into this that reinsurance costs have increased materially.

A small increase in the excess for both events of 625k and a share of the risk up to 57.5m which was previously covered by the reinsurers. So the cost of another large event for Tower has gone up from 11.85m to 12.5m + ~6m = $18.5m. An increase in exposure of 56%.

Interesting trade-off/gamble. Probably a smart strategy but shows this insurance business is definitely not just ticket clipping.

Jaa - Exactly. Someone close to the action here described it to me as " a dark art ".

[Jaa]

How does Cover get cheaper with more of these extreme Weather events ?

Most would assume the opposite to be the case ..

I would love to see the next Insurance Bills reduce markedly - but I will believe it when I see it
which likely wont happen for anyone

How does TWR manage to pull this sort of stunt whilst sucking in vastly rising reinsurance
reimbursements for each of these large events ?

Surely the global reinsurers would be out with red pen sanctioning off frequent flyers in Disaster
prone areas like here & Aussie as more risk becomes apparent ..

Insurance isn't a charity. As a policyholder you should want your insurance company to be successful and profitable so it can employ good people and crucially be supported be shareholders in tough times as Tower was after the earthquakes.

Rational shareholders will only do this if the company has a track record of earning a return equal or better than the market average. This hasn't been true for NZ or Australian insurance companies for the last decade.

Here is a 5 year chart of NZ's major insurers. This should concern all policyholders.
Insurance Comparison.jpg

[Jaa]

How does Cover get cheaper with more of these extreme Weather events ?

Most would assume the opposite to be the case ..

I would love to see the next Insurance Bills reduce markedly - but I will believe it when I see it
which likely wont happen for anyone

How does TWR manage to pull this sort of stunt whilst sucking in vastly rising reinsurance
reimbursements for each of these large events ?

Surely the global reinsurers would be out with red pen sanctioning off frequent flyers in Disaster
prone areas like here & Aussie as more risk becomes apparent ..

Insurance isn't a charity. As a policyholder you should want your insurance company to be successful and profitable so it can employ good people who make accurate risk assessments and crucially be supported be shareholders in tough times as Tower was after the earthquakes.

Rational shareholders will only do this if the company has a track record of earning a return equal or better than the market average. This hasn't been true for NZ or Australian insurance companies for the last decade.

Here is a 5 year chart of NZ's major insurers against the S&P/ASX 200 and S&P/NZX 50 indexes. The underperformance should concern all policyholders as well as shareholders.

Insurance Comparison2.jpg

[nztx]

Just as well TWR have no exposure here -

https://www.nzherald.co.nz/talanoa/v...AZUC3L7NNBUCY/

or do they ?

[ronaldson]

nztx - Vanuatu is one of the Pacific Is countries where TWR are active, so claims can be expected from that cyclone event. I'm sure in all the Pacific countries (excluding now Papua New Guinea, where TWR recently exited as an insurer by on selling its investment) there will be rigorous building code underwriting standards for property risk given the prevalence of these events.

It is highly unlikely that storm will trigger catastrophe cover, but probably will constitute a large event. I have previously pointed out that in FY22 the following were expensed under the large event provision ie Tonga volcanic eruption $6.8m, Cyclone Dovi $3.6m, North Is rainstorms $6.4m and Nelson floods $4.3m. These were each considerable devastating occurrences in their own right but nevertheless TWRs actual accountability was in aggregate still contained within or very close to the overall $20m large event provision budgeted that year.

So that current cyclone should be just another relatively minor blip on the radar so far as TWR is concerned, although we should get an update when the half-year results to 31 March are reported in May.

[nztx]

Actually there have been two cyclones in three days go through Vanuatu

https://www.nzherald.co.nz/talanoa/v...AZUC3L7NNBUCY/

Will they be treated as separate events or just one event ?

News coverage shows things fairly well munted & flattened

[peat]

Will they be treated as separate events or just one event ?

Im not sure about the specific definitions in this case but many policies consider multiple events of the same type within 72 hours to be the same and not incur another excess.

[nztx]

How many Reinsurance lives in the current FY will TWR have left after this ?