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AM Best affirms Tower’s A- credit rating

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AM Best has affirmed Tower New Zealand’s A- rating and stable outlook, reflecting a “very strong” balance sheet, adequate operating performance, neutral business profile and robust enterprise risk management.

Noting a recent settlement with the Earthquake Commission “substantially” reduced Tower’s exposure to ongoing loss from the Canterbury earthquakes, AM Best says Tower has robust financial flexibility, a prudent reinsurance program and a conservative investment strategy.

“AM Best expects Tower to report positive underwriting and operating results over the medium term, supported by appropriate risk selection and pricing, as well as through anticipated expense efficiencies achieved by core system upgrades in recent years,” the agency says.

Tower reported healthy operating profits in 2019 and 2020 after losses in the prior four consecutive years, driven by increased stability in Canterbury Earthquake reserves and more benign weather-related losses.

Tower has a market share of around 4% in New Zealand’s general insurance market and reported gross written premium of $NZ377 million ($350 million) in the last fiscal year.