Auckland, New Zealand-headquartered insurer Tower Insurance has extended its catastrophe reinsurance protection for the coming year at its latest renewal, securing limit to cover a first-event of up to NZ $915 million, while experiencing improved renewal pricing thanks to structural adjustments.
Tower said this morning that it has successfully renewed its reinsurance program that runs to the end of September 2026, aligned with its financial year.
The renewal secured, “comprehensive cover at competitive rates across its home, motor, boat, and commercial portfolios across New Zealand and Pacific markets,” the insurer explained.
It’s a rare reinsurance renewal featuring catastrophe coverage at this point in the calendar, but does give some indications of reinsurer appetites as a result.
A year ago, Tower lifted the top of its reinsurance tower to NZD 800 million for a first catastrophe event, while it secured expanded cover for a third catastrophe event to NZD 85 million, but saw the the attachment point for the first two events rise to NZD 18.75 million, while for the third it remained at NZD 20 million.
At its 2025 reinsurance renewal, Tower has now lifted the top of the tower to NZD 915 million, while continuing with the same third-event cover, but again the attachment has risen, to $20 million now for all three covered catastrophe loss events.
The expiry of certain multi-year reinsurance covers has driven the increase in attachment, Tower said.
The insurer said that it forecasts reinsurance premium expense at 10.7% of Gross Written Premium for its FY26, down from 13.3% in FY25, with this reduction partly offset by lower reinsurance recoveries on property risks that were previously ceded to a proportional treaty.
Tower CEO Paul Johnston said the reinsurance renewal continues to maintain Tower’s strong financial resilience.
He commented, “Tower’s risk-based pricing strategy and ability to dynamically adjust rates has once again enabled us to secure favourable terms for FY26,” Johnston says. “We’ve deepened partnerships with global reinsurers, with several committing to new multi-year agreements. These arrangements offer greater certainty around future reinsurance costs and catastrophe excesses, supporting our resilience.”
In terms of structural adjustments, for large individual property risks the reinsurance protection has been changed from proportional to an excess of loss cover, which means Tower will cover more in losses up to a certain level, after which it will transfer all of the loss to its reinsurers, rather than a proportional, or quota share.
“We’re pleased to have secured a comprehensive programme with stable excesses and lower pricing,” Johnston said. “This supports our ability to maintain competitive pricing for customers while protecting the business from volatility.”
While the structural adjustments have no doubt helped on pricing of the reinsurance renewal for Tower, the costs are likely more favourable in the current market environment as well.
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