Tower Insurance has a “very strong” balance sheet, according to AM Best, which has affirmed the insurer’s financial strength rating of A- and long-term issuer credit rating of a-.

The ratings agency has maintained parent company Tower Limited’s long-term issuer credit rating at bbb-.

“The ratings reflect Tower Insurance’s 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,” AM Best says.

“Other balance sheet considerations include the company’s conservative investment strategy and prudent reinsurance arrangements.”

The New Zealand insurer’s exposure to the 2010/11 Canterbury earthquakes is a “partially offsetting” balance sheet factor, which has led to reserve strengthening actions.

It had about $NZ62 million ($60 million) in net provisions for these events as of last September.

Last month Tower said it is on track to top $NZ222 million ($215 million) in underlying profit this financial year.