TWR - Tower Insurance.

[winner69]

https://www.nzx.com/announcements/410997

Wow - massive downgrade!

Could be a lot worse …just as well they have been and continue to be very ‘prudent’

No divie might make a few grumpy …but big divies coming up with those massive premium increases

[Balance]

A loss to be reported in the first half.

Downgrades after downgrade.

Un-investable imo. TWR is too small a player and not diversified enough to handle the weather challenges bedevilling the industry.

[winner69]

A loss to be reported in the first half.

Downgrades after downgrade.

Un-investable imo. TWR is too small a player and not diversified enough to handle the weather challenges bedevilling the industry.

You’d think that one day the reinsurance people might turn their backs on Nz as well …..must be costing them heaps these days …Tower alone costing them $250m plus

[Balance]

You’d think that one day the reinsurance people might turn their backs on Nz as well …..must be costing them heaps these days

Hopefully not.

Premiums will keep going up as they are right around the world.

Talked to a friend in Northern Queensland last week and she said their insurance premium has doubled over the last 3 years! Cyclones have always been a problem for them but they are now more frequent and more intense. Floodings becoming the norm for low lying areas where they are.

They just don’t make as big a deal as we do over here but climate change sure is a happening thing around the globe.

[bull....]

big downgrade alright and premiums for insurance going sky high another dampener in the cost of living crisis we are in

[winner69]

big downgrade alright and premiums for insurance going sky high another dampener in the cost of living crisis we are in

……and more pressure on business profits

[SailorRob]

Hopefully not.

Premiums will keep going up as they are right around the world.

Talked to a friend in Northern Queensland last week and she said their insurance premium has doubled over the last 3 years! Cyclones have always been a problem for them but they are now more frequent and more intense. Floodings becoming the norm for low lying areas where they are.

They just don’t make as big a deal as we do over here but climate change sure is a happening thing around the globe.

Can you show us the data on the increase in frequency and intensity of Northern Queensland cyclones since 1950? Cheers.

Interestingly Berkshire has seen no changes in their vast global insurance operations due to climatic changes at all.

Will winners fat dividends really come from increased premiums?

If you want a piece of the insurance action, buy MKL or BRK, nothing else.

[Antipodean]

Ouch that is rough, got the dividend call completely wrong.
It is the right call to not pay one while reporting a HY loss though.

Interestingly the downgrade in NPAT guidance reflects exactly the increase in provision for large events, $10m, but also includes costs of reinsurance top up.
Large event spend up to $34m already, new provision leaves $16m until end of year.

Loss of $3m in HY means they are still guidance of $11m - $16m for second HY but will have to wait and see if this pans out.

Growth in GWP of 10-15% translates to $44.5m - $66.8m extra from 2022 reported which is higher than I anticipated, some silver lining.
Edit: GWP growth should be 15%-20% which is $66.8m - $89m growth... or up to $534.7m in annual GWP.

[Poet]

Ouch that is rough, got the dividend call completely wrong.
It is the right call to not pay one while reporting a HY loss though.

Interestingly the downgrade in NPAT guidance reflects exactly the increase in provision for large events, $10m, but also includes costs of reinsurance top up.
Large event spend up to $34m already, new provision leaves $16m until end of year.

Loss of $3m in HY means they are still guidance of $11m - $16m for second HY but will have to wait and see if this pans out.

Growth in GWP of 10-15% translates to $44.5m - $66.8m extra from 2022 reported which is higher than I anticipated, some silver lining.

Growth in GWP is now expected to be between 15% and 20% so an additional $66.8m to $89.0m and that's for this year where presumably the premium increases have not been in place for a full year. Translates to even more GWP when applied to a full year. I think the GWP increase is the bigger story here as all insurance companies are increasing premiums rapidly.

[ronaldson]

Waiting for the dust to settle on the NZX pricing as most of this announcement was predictable and should have been already baked in. Reinsurance covers the above excess cost of both the Upper North Is weather event and Cyclone Gabrielle and would kick in if the costs of the dual Vanuatu cyclones escalate further. But the administrative overhead to manage the volume of claims over an extended period, as many will be "long tailed", will drag on profit for some time to come.

GWP growth is significant currently but remember EQC are now entitled to more of the premium on relevant policies as their liability increases from $150k to $300k on new/renewed policies, although TWRs risk/liability falls in qualifying circumstances to offset.

I don't know why the announcement references that the anticipated $3m loss for the half year to 31 March 2023 is "after taxation" as TWR is carrying significant accrued losses which will offset against profits (if any) for years to come.

Not to declare an interim dividend and await the full year result in due course is sensible and holders need to await the "more information" now promised in the announcement due 25 May. Already we have had further flooding in the Nelson Region so this will be yet another year which TWR will be keen to put in the rear view mirror!