Insurers meet in the middle over $44m claim
Tower settles reinsurance dispute with Peak Re.
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Hawke’s Bay
Insurer Tower has settled a claim against reinsurer Peak Re on the eve of arbitration for half the amount it was claiming.
In a statement to the NZX, Tower said it would receive $22 million of the $43.75m claimed under the 2015 adverse development policy contract with Peak Re.
The balance of the claim will be written off, leading to a $15.2m after tax impact on Tower’s profit, the company said.
Tower chairman Michael Stiassny noted that the company saw the arbitration, due to take place next month with a decision mid-year, as risking a binary outcome – all or nothing.
“The board determined that a commercial settlement satisfactorily dealt with this unpredictability for both parties, and created welcome certainty for our shareholders and our business.
“Tower committed to addressing the legacy risks arising from the Canterbury earthquakes and the signing of this agreement is a significant step forward in removing those risks,” he said.
The company said the settlement meant it would hold about $136m of solvency capital, representing $28m more than the minimum required by insurance regulator the Reserve Bank.
Tower also has an outstanding claim against EQC for $47m.
Its shares last trade up 1.5c at 68.5c, valuing the company at $231m.
The company will hold its annual meeting in Auckland tomorrow.
Tim Hunter
Wed, 28 Feb 2018
Wed, 28 Feb 2018
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Insurers meet in the middle over $44m claim
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