Provisions around cover for the 2011 Canterbury earthquake have prompted Tower to ask for its shares to be put on a trading halt. Photo / NZME.
Provisions around cover for the 2011 Canterbury earthquake have prompted Tower to ask for its shares to be put on a trading halt. Photo / NZME.
Shares of Tower have been halted on the New Zealand and Australian stock exchanges, as it reviews its Canterbury provisions and flags a "material impact" ahead of reporting its first-half earnings next month.
In its request for a trading halt to the ASX and NZX, the insurer said in preparationfor reporting its earnings in the six months ended March 31 it is "reviewing its Canterbury provisions and related matters, which may have a material impact." The halt comes after earlier this month it said it had, 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 per cent, or up to $6.25 million, with the balance covered by reinsurance for the seven year term of the agreement. The insurer said it had settled 93 per cent by volume of claims related to the Canterbury earthquakes and expects to reach 95 per cent by year end.
The insurer also flagged its capital holdings are well in excess of the Reserve Bank's minimum solvency requirements, giving it room to buy back as much as $34 million of its stock. At the time it flagged the on-market buyback in May, after it reported its annual results.
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.
Shares of Tower last traded at $2.205 and have gained 2.6 per cent since the start of the year. The stock remains on hold pending further announcement from the company.
