Tower buys more reinsurance protection for FY25 at higher attachment point

Auckland, New Zealand-headquartered insurer Tower Insurance made some adjustments to its reinsurance programme at its renewal, opting to increase the size of the upper catastrophe limit and raise the attachment point for the first two events, resulting in a lower reinsurance spend for the firm.

Tower’s FY25 reinsurance programme provides the carrier with protection for its home, motor, boat, and commercial portfolios across both New Zealand and Pacific markets.

For 2025, the insurer has bought more protection than last year, lifting the catastrophe upper limit to NZD 800 million from NZD 750 million for the FY24 programme. At this year’s renewal, Tower also expanded cover for a third catastrophe event to NZD 85 million, up from NZD 75 million last year.

As the size of the programme has increased, so too has the attachment point for the first two events, rising to NZD 18.75 million from NZD 16.9 million in FY24, which the company says is due to expiring multi-year arrangements. Unchanged from last year is the NZD 20 million retention for a third event.

The insurer estimates that the cost of its FY25 reinsurance programme amounts to 11.7% of total income, which is down from 13.9% in FY24.

“Tower’s focus on risk-based pricing combined with our dynamic rating ability helped us secure favourable terms for our FY25 reinsurance. We’ve further strengthened relationships with global reinsurers, with several agreeing to new multi-year arrangements, which provides greater long-term certainty of reinsurance costs and catastrophe excesses,” said Tower Chief Financial Officer (CFO) Paul Johnston.

“We’re pleased to have secured a comprehensive reinsurance programme with stable excesses and pricing. This will help Tower maintain competitive pricing for customers,” he added.