Tower (NZX/ASX: TWR), a prominent Kiwi insurer providing comprehensive home, motor, boat, and commercial insurance across New Zealand and Pacific markets, has successfully completed the renewal of its reinsurance programme for the financial year ending 30 September 2027 (FY27). The company announced it has secured comprehensive cover at competitive rates, reflecting favourable market conditions and its disciplined approach to risk management, which will enhance its resilience and support competitive pricing for customers.
The FY27 reinsurance programme features several key updates. The catastrophe upper limit has been increased to $970 million, up from $915 million in FY26. Tower also improved the structure for its third catastrophe limit, increasing cover to $100 million from $85 million in FY26 while enhancing efficiency. Catastrophe event excesses remain consistent at $20 million, unchanged from FY26, and the $970 million catastrophe limit includes a pre-paid reinstatement, providing cover for two large catastrophe events.
Financially, Tower estimates its reinsurance premium expense will represent 9.5% of Gross Written Premium in FY27, a reduction from 10.6% in FY26. Tower CEO Paul Johnston stated this decrease reflects a combination of favourable global reinsurance market conditions, Tower’s strong business performance, and the expansion of its risk-based pricing capability across additional perils. He emphasised that this disciplined approach helped secure a strong outcome for the FY27 arrangements.
Further strategic adjustments include a revised approach for the third catastrophe limit, now secured on pre-agreed terms payable if two catastrophe events occur, rather than an annual prepaid limit. Tower has also strengthened relationships with global reinsurers, committing to new multi-year agreements. These arrangements are anticipated to provide greater certainty around future reinsurance costs and catastrophe excesses, reinforcing the insurer’s long-term operational stability.
