Tower hit by storm and riot claims

By NZPA

Friday 14th July 2006

Financial services company Tower said it faced recent insurance claims of over $5 million from local storms and Solomon Island riots, but these were in line with its forecasts.

It was not updating its profit guidance.

The company said its share of claims from the South Island snowstorms were in line with Insurance Council estimates of losses of total damage of around $35 million.

"The recent floods and snowstorms in the South Island, coupled with floods in the lower North Island was an industry issue, and although significant in size, is not unexpected for an insurer such as Tower who operates in this market," Tower managing director, Jim Minto said.

Tower said in May at its half year results briefing that the second half of its financial year was usually marked by a seasonal increase in general insurance claims due to weather-related events.

"Tower's claims experience in the past few months has been consistent with this expectation."

The Dunedin and Mosgiel floods in late April generated claims of around $550,000; the June snowstorms generated about $2.7m in net claims, mainly from roof and gutter damage; and last week's North Island floods are expected to generate claims worth $1m.

As well, there had been the usual upturn in house fires in the winter.

Tower said it had a limited exposure to Solomon Islands riots of early April and expected related claims to be about $850,000. Strong underwriting contained the level of claims to well below gross losses.

Despite these claims its Pacific business remained profitable, Tower said.

It also said that after a long period of profitability home portfolios in New Zealand had seen losses over the past few years.

Tower shares fell 11c to $3.40 on the announcement. They have risen strongly $1.50 three years ago to a recent four-year high.

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