Quake shakes Tower’s profit forecast

It said market expectations of its net profit after tax for the year ending September 30 should be reduced by $9.4 million from $50.1 million (19%) to take into account increases in claims provisions relating to the February 2011 earthquake. 
This equates to a one-off impact of 3.5c per share.

Tower said the impact of the Christchurch earthquakes continued to involve elements of uncertainty for the company and the Board felt that it was prudent to be conservative when providing for the amounts that will be paid out to affected policy holders.

“While Tower’s reinsurance cover for this event has not been fully utilised, continued notification of claims and the application of an appropriate risk margin, together with an inflationary allowance, will bring the total claims and provisions over Tower’s $325m of cover,” it said.

“Since the Christchurch earthquakes, Tower has increased the limits on its reinsurance program to $500m per event.”