Tower, with ample capital to meet Reserve Bank rules, announces $34m buyback
Tower [NZX: TWR], the listed general insurer, said its capital holdings are well in excess of the Reserve Bank's minimum solvency requirements, giving it room to buy back as much as $34 million of its stock.
The on-market buyback would start after the release of the company's first-half results on May 26. At the end of 2014, the company held at least $135 million 'in solvency' above the central bank requirements, it said.
Tower returned $56.7 million to shareholders through buybacks in January and September last year after a series of asset sales that left it with only the general insurance business. In July it sold its life business to Foundation Life (NZ) Holdings for $36 million and late last year flagged the $34 million buyback announced today.
Separately, the company said it has settled 93% by volume of claims related to the Canterbury earthquakes and expects to reach 95% by year end. Chief executive David Hancock said Tower has, through its reinsurance programme, increased its level of cover for the remaining Canterbury rebuild amounting to an extra $50 million related to the key February 2011 earthquake.
Tower said it will retain exposure to the first $30 million in costs above current reserves but on the next $50 million of costs will bear only 12.5%, or up to $6.25 million, with the balance covered by reinsurance for the seven year term of the agreement.
Tower shares last traded at $2.27 and have gained 5.6% this year.