AM Best has affirmed the financial strength rating of Tower Limited at A- and long-term issuer credit rating at a- following a move by the New Zealand insurer to simplify its corporate structure.

The changes, which came into effect last month, have amalgamated Tower Financial Services Group, Tower New Zealand and Tower Ltd, into Tower Insurance Limited. Tower Insurance’s legal name has been changed to Tower Limited.

“The ratings of Tower reflect its balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management,” the ratings agency says.

“AM Best also views Tower as having robust financial flexibility, a prudent reinsurance programme and a conservative investment strategy.”

However, the agency says a partial offsetting factor remains the ongoing exposure to the Canterbury earthquakes, citing the potential for adverse reserve development and lower-than-expected recoverables from the Earthquake Commission.