Tower, with ample capital to meet RBNZ rules, announces $34M buyback

Thursday 16th April 2015

Tower, the listed general insurer, said its capital holdings are well in excess of the Reserve Bank's minimum solvency requirements, giving it room to buyback as much as $34 million of its stock.

The on-market buyback would start after the release of the company's first half results on May 26. At the end of 2014, the company held at least $135 million 'in solvency' above the central bank requirements, it said.

Tower returned $56.7 million to shareholders through buybacks in January and September last year after a series of asset sales that left it with only the general insurance business. In July it sold its life business to Foundation Life (NZ) Holdings for $36 million and late last year flagged the $34 million buyback announced today.

Separately, the company said it has settled 93 percent by volume of claims related to the Canterbury earthquakes and expects to reach 95 percent by year end. Chief executive David Hancock said Tower has, through its reinsurance programme, increased its level of cover for the remaining Canterbury rebuild amounting to an extra $50 million related to the key February 2011 earthquake.

Tower said it will retain exposure to the first $30 million in costs above current reserves but on the next $50 million of costs will bear only 12.5 percent, or up to $6.25 million, with the balance covered by reinsurance for the seven year term of the agreement.

Tower shares last traded at $2.27 and have gained 5.6 percent this year.

BusinessDesk.co.nz

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