Tower said reinsurance recoveries for NZ floods & cyclone could near ~$276m

New Zealand based insurance company Tower Limited has updated its loss estimates for the local severe flooding and cyclone Gabrielle, now believing it could make reinsurance recoveries of as much as $276 million for the two events.

Previously, Tower had highlighted that it expected its excess-of-loss catastrophe reinsurance would be triggered by these events, with a retention of $11.875 million of losses per-event before that cover attaches.

On the Auckland and Upper North Island floods and severe weather, Tower had said its reinsurance recovery could have been between $83.125 million and $113.125 million, based on a loss estimate of $95 million to $125 million.

But now, Tower has increased the loss estimate to between $195 million and $225 million, meaning at the upper-end roughly $213 million could be recovered from its excess-of-loss reinsurance partners for that event.

On Cyclone Gabrielle, previously Tower had not given an estimate, but now says that with 3,350 claims received, it estimates the financial impact of this event to be within the range of $55 million to $75 million.

At the upper-end of that range, that could be a further $63 million in reinsurance recoveries, giving a total of $276 million should both events estimates move toward the top-end of its estimates.

The insurer said that its “robust reinsurance arrangements have multiple levels of cover in place and provide up to $889m of catastrophe cover.”

Tower is now is looking to reinstate catastrophe reinsurance to cover the increased costs of the Auckland flood and sever weather event, adding that it has “full protection for a third catastrophe event and will reinstate full levels of protection for a fourth catastrophe event in the financial year.”

On cyclone Gabrielle, Tower said that it has sufficient reinstatement cover in place.