29 May 2018

Tower Insurance's earnings hit by weather claims

4:28 pm on 29 May 2018

Insurance company Tower has posted a bigger first half loss as its earnings were hit by bad weather claims and an arbitration decision.

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Photo: Google Maps

The country's third biggest insurance concern reported an after tax loss of $11.6 million for the six months ended 31 March, against last year's $8.2m.

The result was hit by $5m in claims for bad weather at the start of the year, a $16.2m cost after Tower got only half of a disputed payout from a reinsurance company after an arbitration decision, and some lingering costs from Canterbury earthquake claims.

Tower's chief executive Richard Harding said the company's premium income was up and its overheads were down, reflecting the restructuring it had been going through.

"We are making it easier for customers to purchase insurance from us and the continued improvement of our online offering has generated a significant increase in sales above industry averages," Mr Harding said.

"While making it easier for our customers, we're also simplifying our business which is delivering improved operating performance," he said.

Tower's underlying profit was $7.3m, down about 9 percent on a year ago.

The company said it continued to be pressured by the aftermath of the Canterbury earthquake. It had settled 159 of the outstanding claims but then received another 66 new claims from the EQC.

"The need for a permanent fix grows ever more pressing and Tower welcomes the recent government announcement of an enquiry into EQC as an important first step," Mr Harding said.

Tower has started action to recover quake related costs from EQC, which it has valued at a minimum of $66.9m.

The company said it expected to resume paying dividends to shareholders at the end of the financial year.

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