TWR
16/04/2015 14:44
GENERAL
PRICE SENSITIVE
REL: 1444 HRS Tower Limited
GENERAL: TWR: TOWER strengthens Canterbury reinsurance; capital buy back
16 April 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
TOWER strengthens Canterbury reinsurance; plans capital buy back for June
quarter
TOWER Limited (NZX/ASX: TWR) advises it has now settled and closed 93% (by
volume) of all claims related to the Canterbury earthquake events, and
remains on track for 95% claims completion by the end of 2015.
TOWER notes developments within the industry regarding the pace and cost of
the remaining rebuild and the increased provisioning of some industry peers.
Despite TOWER's industry leading claims resolution, risks continue in regard
to increasing costs and time delays.
Chief Executive Officer David Hancock said the company had taken the
opportunity through its reinsurance programme to increase the level of cover
in relation to the remaining Canterbury rebuild.
"We have secured an additional $50 million in cover at attractive rates for
adverse developments associated with the key February 2011 earthquake event.
"This additional cover limits exposure and maintains financial flexibility
should circumstances change, further underpinning strong solvency."
TOWER will retain exposure to the first $30 million in costs above current
reserves. However, on the next $50 million in costs TOWER will bear only
12.5%, or up to $6.25 million, with the balance covered by reinsurance for
the seven year term of the agreement.
"TOWER has successfully utilised strong global relationships and improving
reinsurance markets to efficiently manage risk. We will continue to take
advantage of these opportunities for the benefit of shareholders, where
prudent to do so.
"We will also continue to look to invest in the growth of general insurance
and return excess capital to shareholders wherever possible," Mr Hancock
said.
Capital management programme continues in June quarter
TOWER continues to hold significant capital above the current solvency
minimum required by the Reserve Bank of New Zealand and its own long-term
solvency policy. At the end of FY2014, the company held at least $135 million
in solvency above these requirements.
Subject to final approvals and shareholder notifications, TOWER expects the
next stage of its capital management programme, an on market share buy back
of up to $34 million, to commence following the Company's half-year results
announcement on Tuesday 26 May.
A full overview of TOWER's risk management approach and capital position will
be available at the half-year results presentation.
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:00263196 For:TWR Type:GENERAL Time:2015-04-16 14:44:13
