Insurance company Tower today warned that higher than expected claims from the Canterbury earthquakes in New Zealand six years ago will drag on after tax profits for the full year by $16.2 million.
A short time, ago, shares in the dual-listed business were down 14.5% to $1.12, from a 12-month high of $2.02.
The company says the quakes have proved to be an unprecedented challenge for insurance companies round the world and in New Zealand.
There have been more claims than expected and each of those has been higher than forecast.
Tower has 560 claims remaining from 16,000 lodged.
The insurance industry as a whole received more 800 new claims over the last six months.
“The general environment in Canterbury, six years after the event, has resulted in a greater number of disputes and extended time required to reach agreement with customers,” Tower says.
“This has been further exacerbated by opportunistic advocates who created unfounded fear in regards to application of the statute of limitations.
“This has resulted in a higher number of disputes and litigation than expected.”
The Canterbury earthquake hit the South Island of New Zealand in 2010 with a magnitude of 7.1. The main quake ,and aftershocks up to a year later, left 185 dead and billions of dollars in damage.
Tower, in its half year results to March, reported a loss of $8.7 million, impacted by adjustments to provisions on the Canterbury payouts.
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