Published 14 June 2011
Tower Ltd filed an application in the Wellington High Court yesterday seeking a declaration on the correct interpretation of the relevant provisions of the Earthquake Commission Act after the commission limited claims to a maximum amount in any policy year.
Tower’s group managing director, Rob Flannagan, said when the company released its half-year results on 27 May it had provided for more than $350 million of claims for the 2 major Christchurch earthquakes in September & February.
The notes to the accounts mentioned Tower didn’t accept the commission view but didn’t say what it proposed to do about it. Mr Flannagan added yesterday: “If this (commission position) is correct, the EQC limits do not apply per event and are a maximum aggregate limit in a policy year (unless a payout has been made),” the company said.
Tower made a $26.2 million half-year profit, down 5.4% from 2010, before taking the impact of the Christchurch earthquakes and discount rate into account. It said it lost $7.5 million in the earthquakes and another $5.7 million from changes in the global investment market, which in turn affected the discount rate applied under accounting standards in valuing individual life risk policy liabilities.
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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.