TWR - Tower Insurance

[winner (n)]

Pretty bad flooding in Nelson/Tasman with Auckland about to take a hit. As will Towers large event fund I expect.

No worries here ..... Tower don't cover things in flood prone areas

[LoungeLizard]

No worries here ..... Tower don't cover things in flood prone areas

Really? Are you sure about that? There's huge swathes of NZ that are either currently, or will be, designated flood prone. I'd be surprised if they don't cover many of the parts that are currently getting flooded.

[Left Field]

I'd be surprised if they don't cover many of the parts that are currently getting flooded.

TWR have been leaders in adjusting premiums to reflect climate change risks for several years now. Gone are the days of broad brush averages. The location of all properties insured is now checked thoroughly to assess a wide variety of risks and premiums are individually adjusted (not averaged as in the past.)

Waterfront and flood risk properties have faced large premium hikes (even non-renewal in some cases) while  assessed safer properties actually had premium reductions. For vehicle insurances, Boy racers with WRX's pay up to 10 x's my annual car insurance premium etc etc.

In the past. the Canterbury earthquakes  hurt TWR more than other insurers as they held considerable market share in Canterbury. Ever since, TWR have been more careful to spread risks  widely throughout NZ.

Today's weather event floods, as sad as they are for those effected, are 'Business as Usual' for today's TWR.

TWR shareholders can further mitigate risk by limiting their exposure to (say) 5% to 10% of their portfolio.

[Basil]

Great post.  Yes also, their risk based pricing is rewarding those that don't make claims too.  We've never claimed on our homes over the decades, less than $1,700 annual premium for home insured value of $1.1m now with Tower, or me personally on my vehicle, less than $900 annual premium on a $65K vehicle.  My wife has made a few claims on her vehicle over the years though so pays a somewhat higher premium on a lower value vehicle.

[LoungeLizard]

Yes, I wouldn't put my house on a single investment, especially an Insurance company 

As we enter the rainy season,  it will be interesting to see whether events like the last few days really are "business as normal" for Tower.

[Dolcile]

Some seemingly upward pressure on the SP.  I purchase a second tranche in early June at 1.54. Got the dividend and now it is back over 1.60.

[alkebab]

Some seemingly upward pressure on the SP.  I purchase a second tranche in early June at 1.54. Got the dividend and now it is back over 1.60.

Decent volumes over Wed/Thu/Fri last week and I didn't see it on the charts, so it may have been done off market. Was going to say yesterday that there was a big resistance level at 1.605 and it broke through it today.

Expecting a bit of rain tomorrow 

[winner (n)]

No news is good news ..... recent storm no affecting them by looks of it

[Left Field]

Salt Funds sell 4 mill shares taking some gains off the table.

https://api.nzx.com/public/announcement/454868/attachment/447279/454868-447279.pdf

[Basil]

Tower have been doing a lot of work with measuring risk.  I got my annual house insurance renewal from them this week.  My premium is down 10% and I noted in the documentation they are assessing my house as low risk for earthquake and very low risk of flood.  I think they will either put an extreme flood risk premium on some area's of N.Z. making insurance super expensive or withdraw coverage altogether.

[raW tent Buffer]

Sold out yesterday after holding for nearly a year. Been a nice earner for me but think the large claims will take a big hit with even more wet weather forecast, probably not going to see too much of that returned at EOY in my opinion. Will keep an eye and might buy back in at some stage. GLTAH

[Dolcile]

Tbh I don't get selling - but each to their own.   For mine, Tower is in the business of insuring risk.  We've had a some bad weather that they may have some exposure too.  That's what the premiums are for!   

[raW tent Buffer]

There's not much to understand, it rained lots which caused lots of flooding and presumably lots of insurance claims. Very likely to have eaten a chunk out of Tower's large claims, which means less money returned to SH at the end of the year... easy to understand why people would sell when their returns are 'trickling' away. And weather is supposed to continue in this vein for the foreseeable so more money not returned to SH.

[Basil]

I feel sorry for those affected and don't in any way want to appear to make light of the impact on them but from what I have seen on the news it seems to have mostly affected people in farming and low density fairly remote rural area's as compared to say the cyclones and weather event deluges of the summer of 2023 that smashed the Auckland region twice where 1.7 million people live and decimated the east coast twice.

I think the likes of FMG insurance who do a lot of farm insurance will get hit pretty hard but I estimate the impact on Tower will be fairly moderate. Some impact on the $50m extreme weather reserve but my best guess is a significant majority of that reserve remains intact.   Time will tell.

[Hectorplains]

I feel sorry for those affected and don't in any way want to appear to make light of the impact on them but from what I have seen on the news it seems to have mostly affected people in farming and low density fairly remote rural area's as compared to say the cyclones and weather event deluges of the summer of 2023 that smashed the Auckland region twice where 1.7 million people live and decimated the east coast twice.

I think the likes of FMG insurance who do a lot of farm insurance will get hit pretty hard but I estimate the impact on Tower will be fairly moderate. Some impact on the $50m extreme weather reserve but my best guess is a significant majority of that reserve remains intact.   Time will tell.

Similar flooding in Nelson/Marlborough in August 2022 generated around $22 million in claims. There were 1248 reported claims (according to the Insurance Council.) Tower received around 150 claims nationwide for the floods, with approximately one-third (50) from the Nelson/Marlborough region.  By back of the envelope calculation, Tower's share of claim numbers in the region: 50 of 1248 = ~4.0%. Therefore, a proportional value estimate: 4% × $22 million ≈ $880,000. Which does seem quite low (perhaps I have missed something?) It suggests that the latest "event", while certain to be higher, will likely be in the low $millions.