Tower Secures Competitive Reinsurance Terms for FY25

Highlights:

• Reduced Reinsurance Costs: Tower Limited (NZX: TWR) secured reinsurance for FY25 at 11.7% of total income, down from 13.9% in FY24, due to effective risk-based pricing.
• Multi-Year Agreements with Reinsurers: Tower strengthened its partnerships with global reinsurers, obtaining multi-year agreements that provide long-term certainty and stability in managing reinsurance costs and catastrophe risks.
• Enhanced Financial Stability: The new reinsurance terms are expected to bolster Tower's financial resilience, helping the company mitigate risks and maintain consistent coverage despite potential natural disasters.

Cost Reduction in Reinsurance

Tower Limited (NZX: TWR) has successfully negotiated favorable reinsurance coverage for the 2025 financial year, reducing the overall reinsurance cost to 11.7% of its total income. This marks a significant improvement from the 13.9% of income spent on reinsurance in FY24, reflecting Tower's strategic focus on risk management and pricing. Chief Financial Officer Paul Johnston attributed the favorable terms to the company’s proactive approach to risk-based pricing and its use of dynamic rating systems. These initiatives have allowed Tower to secure competitive pricing in the reinsurance market.

Strengthening Reinsurer Relationships

A key component of Tower's strategy for securing favorable reinsurance terms involved strengthening its partnerships with global reinsurers. Several reinsurers have agreed to enter into new multi-year arrangements with the company, offering long-term stability and greater certainty regarding reinsurance costs. These multi-year agreements are expected to benefit Tower in the face of potential natural disasters, as they provide more predictable management of catastrophe excesses.

Impact on Financial Stability

This development comes as a significant advantage for Tower, enhancing its ability to manage risks while maintaining financial resilience. By securing these reinsurance agreements, Tower can continue to safeguard its operations and provide consistent coverage for its clients, despite the unpredictable nature of global weather events and other catastrophes. Johnston emphasized that the certainty provided by these agreements strengthens Tower's financial position and offers long-term security in managing future risks.

With these measures in place, Tower is well-positioned to navigate potential challenges in the 2025 financial year while maintaining its commitment to protecting policyholders and enhancing profitability.

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