New Zealand insurer Tower has estimated Cyclone Harold, which swept through several Pacific island groups earlier this month, could financially impact its business by $NZ8-10 million ($7.5-9.4 million).

The pre-tax estimates includes an allowance for further development of claims, the insurer says in an investor update. Tower has a reinsurance program in place that limits its total exposure to the category-5 storm to $NZ10 million.

The powerful storm inflicted the most damage in Vanuatu, Fiji and Tonga when it struck this month, destroying homes and utility infrastructures. It was the first category-5 cyclone to hit the region since Gita in 2018.

Tower says it has activated its aggregate reinsurance cover to provide immediate protection for further large weather events in New Zealand and the Pacific to a total of $NZ20 million ($18.8 million) for the remainder of this financial year.

The insurer’s total large event expense for this financial year has now exceeded the $NZ8 million ($7.5 million) assumption it provided in its market guidance for this financial year.

Including last November’s Timaru hailstorm, Tower’s total large event expense is about $NZ10.5-12.5 million ($9.8-11.8 million) pre-tax, exceeding its market guidance by $NZ2.5-$4.5 million ($2.4-4.2 million).

Tower will provide an updated guidance next month when its first-half results are released.