General insurer Tower lifts reinsurance cover by $55 million, anticipates reinsurance premium expense will come to 9.5% of Gross Written Premium in its 2027 financial year

Tower Insurance has renewed its reinsurance programme for its September 2027 financial year, increasing its catastrophe cover upper limit by $55 million.

The general insurer’s catastrophe upper limit, the maximum amount an insurer will pay out for natural disaster events, is $970 million for the 2027 financial year, up from $915 million in the prior year.

This will cover Tower’s home, motor, boat and commercial portfolios across New Zealand and Pacific markets.

In a statement on the NZX on Monday, Tower said the $970 million catastrophe limit includes a pre-paid reinstatement, providing cover for two large catastrophe events.

Tower has estimated its reinsurance premium expense will be 9.5% of Gross Written Premium (GWP) in the 2027 financial year, down 1.1% from 10.6% in the 2026 September year. GWP is the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer.

Tower chief executive Paul Johnston said this reduction reflected a combination of “favourable” global reinsurance market conditions, the 2025 and 2026 expansion of its risk-based pricing capability across additional perils and Tower’s strong business performance.

“Our disciplined approach to risk selection, pricing and portfolio management has helped us secure a strong outcome for our 2027 reinsurance arrangements, supporting Tower’s ongoing resilience and ability to offer competitive pricing for customers,” he said.

The general insurer revised its approach to secure reinsurance for a third catastrophe limit, switching from a pre-paid limit structure to a “pre-agreed” one. This means for 2027, Tower has secured this reinsurance cover on pre-agreed terms, payable if two catastrophe events occur.

Tower’s catastrophe event excesses, which provide financial protection to insurers in the event of a major natural disaster, will remain at $20 million for the 2027 financial year, unchanged from its 2026 year.

Tower has continued to strengthen its relationships with global reinsurers, with “several partners” committing to new multi-year agreements, according to the insurer.

The general insurer released its financial results for the six months ending March in May, reporting $300 million from GWP, up 1% from 2025.

Tower reported a half-year underlying net profit after tax (NPAT) of $36.8 million, 40% lower than the $61.7 million in NPAT Tower recorded in the same period a year ago. The company’s board declared a fully imputed interim dividend of 5 cents per share.

Tower saw a 5% or 15,000 increase in its customer base compared to the previous year, bringing total customer numbers to 327,000. Customer growth was particularly strong in house policies – up 9% – alongside more moderate growth in motor and contents – up around 2%, according to Johnston.