Tower says record flooding that struck Auckland and surrounds January 27 has resulted in 5325 claims, while damage caused by Cyclone Gabrielle last month triggered a further 2200.

The insurer maintained an estimated cost of $NZ95-to-125 million ($86.9-114.4 million) for the Auckland flood event. It is still estimating the financial impact of the cyclone.

Each event is expected to trigger a reinsurance excess of $NZ11.88 million ($10.98 million) and to be mostly covered by that arrangement.

Tower, which plans to expand its natural hazards model to include landslips and coastal hazards this year, last week placed reinsurance reinstatement cover which it says will ensure sufficient protection for two additional catastrophe events until September 30.

Tower previously purchased a proportion of cover for a third event of up to $NZ57.5 million ($53.09 million) which it says materially reduced the cost of the reinstatement purchase. Tower’s new reinsurance limits its exposure up to $NZ889 million ($820.86 million).

“We plan for such events, both financially and in our operations. Our continued growth and agility in responding to external challenges positions Tower positively for the future,” Tower CEO Blair Turnbull said.

Tower’s gross written premium (GWP) rose 13% to recorded $NZ123 million ($112.5 million) in October-December. New Zealand personal lines market share increased to 9.5%, from 9.2% in the same period last year, through a balanced mix of rating and volume. New Zealand risks in force grew 5% to 582,000.

Average motor claims frequency increased to 13%, up from 12% pre covid, due to higher traffic volumes and an increase in motor thefts. Tower’s claims ratio excluding large events was 54% for the quarter, up from 47% a year earlier.

CFO Paul Johnston says the current reinsurance market is challenging, which is affecting both the structure and the cost of reinsurance and will continue to do so, though Tower was able to quickly place its reinstatement cover at “reasonable prices”.

“Reinsurers ... are attracted to Tower’s strong underlying business, our approach to risk-based pricing and our dynamic rating capability,” he said.

Tower maintained guidance for an annual underlying net profit of $NZ18-23 million ($16.46-to-21.04 million), including its expanded large events allowance of $NZ40 million ($36.57 million) and the cost of the new reinsurance arrangements.