Ann: FORECAST: TWR: Increase in claims provision; 1H15 earnings guidance

• Release Date: 01/05/15 08:43
• Summary: FORECAST: TWR: Increase in claims provision; 1H15 earnings guidance
• Price Sensitive: No
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					TWR
01/05/2015 08:43
FORECAST
PRICE SENSITIVE
REL: 0843 HRS Tower Limited

FORECAST: TWR: Increase in claims provision; 1H15 earnings guidance

1 May 2015

Market Information
NZX Limited
Level 2, NZX Centre
11 Cable Street
Wellington
New Zealand

Company Announcements Office
Australian Securities Exchange Limited
Exchange Centre
Level 6, 20 Bridge Street
Sydney NSW 2000
Australia

INCREASE IN CLAIMS PROVISIONS FOR CANTERBURY REBUILD AND 1H2015 UNDERLYING
EARNINGS GUIDANCE OF $17-18 MILLION

TOWER Limited (NZX/ASX: TWR) today announced that it expects its provisions
for claim costs, attributable to the company, in relation to the Canterbury
earthquake events will increase by approximately $20.9 million to $22.4
million post-tax.

The TOWER Board's commitment to maintaining a strong balance sheet means the
company remains well capitalised at both the corporate level and general
insurance business level, holding significant capital above the current
solvency minimum required by the Reserve Bank of New Zealand and its own
long-term solvency policy. The company as at 31 March 2015 held approximately
$110 million in solvency above these requirements. Consequently, TOWER does
not expect this increase in provisions will require an increase in its
solvency reserves.

TOWER maintains its intention to continue its capital management programme as
an important element of its strategy. Details of the programme will be
affirmed with the release of the 2015 half year audited accounts on Tuesday,
26 May 2015.

Actuarial Report on Canterbury Claims

Two years ago, TOWER commissioned Deloitte to undertake quarterly actuarial
reviews of the company's claims provisions in relation to the Canterbury
earthquake events.  The review for the period ending 31 March 2015, which is
currently underway, has highlighted that claims costs anticipated to be borne
by TOWER have increased primarily due to:

- the anticipated impact of the industry-wide increase in repair and rebuild
costs and time delays affecting all outstanding construction work.
- an increase in costs associated with settling complex claims associated
with multi-unit dwellings impacted by the earthquakes;
- greater clarity of the apportionment of claims costs between TOWER and its
reinsurers for each Canterbury earthquake event;

As at April 2015, TOWER had settled and closed 94 percent (by volume) of all
claims relating to the Canterbury earthquake events, and remains on track to
complete 95 per cent by the end of calendar year 2015.

The resolution of Canterbury claims remains a key operational priority for
TOWER, with a dedicated team committed to providing certainty for customers
and shareholders as they work through outstanding claims.

Upon receipt of the final actuarial report and consideration of that report
by the Board, TOWER expects to advise the final amount of the increase in its
claims provision and associated impact on earnings, at its 2015 half year
results announcement.

Underlying Earnings Guidance

Following review of the company's unaudited management accounts for the six
month period ending 31 March 2015, TOWER anticipates its general insurance
underlying net profit after tax, which excludes the impacts of the Canterbury
earthquakes, will be between $17 million and $18 million.

The anticipated improved earnings result has been supported by premium rate
increases, growth in Pacific earnings and investment earnings, in a benign
claims environment.

ENDS

David Hancock
Chief Executive Officer
TOWER Limited
ARBN 088 481 234 Incorporated in New Zealand

For further information, please contact:
Tracey Palmer
Head of Corporate Communications
Mobile: +64 21 837 860
Email: [email protected]
End CA:00263768 For:TWR    Type:FORECAST   Time:2015-05-01 08:43:18