New Zealand insurer Tower today announced that it has entered into a $NZ42.1 million ($39.98 million) settlement agreement with the Earthquake Commission (EQC) in relation to “an outstanding receivable” resulting from the 2010/11 Canterbury earthquakes.

This follows a similar agreement that the EQC reached with Suncorp, as previously reported by insuranceNEWS.com.au.

Under the settlement agreement Tower will receive $42.1 million after disbursement to reinsurers and costs. The write-off of the residual amount will result in an impact of approximately $NZ9.5 million ($9.02 million) on Tower’s FY20 reported net profit.

The insurer says the settlement enables it to turn its “full focus to the future”.

“The Canterbury earthquakes remain a significant event in New Zealand’s history and will have a lasting impact on the community,” Tower Chairman Michael Stiassny said.

“For Tower, this legacy resulted in distractions that have been progressively removed over the years and it is important we provide the management team with clear air to move the business forward and accelerate.

“The board determined that reaching this settlement agreement dealt with any remaining unpredictability and gave certainty to our shareholders, who will be pleased to see this risk removed from our business.

“We now have a very strong capital position and will provide a further update in relation to dividend payments with our 2020 financial year results announcement tomorrow.”

EQC CEO Sid Miller says the settlement to resolve the allocation of costs means that both businesses can “draw a line under the past, and continue to focus on helping sort out any remaining claims for customers”.

“The series of earthquakes suffered by the Canterbury region caused a number of complexities in allocating building and land damage and the cost of repair between different earthquake events,” he said.

“This settlement is a significant milestone for EQC in our Canterbury earthquake recovery program.”