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Tower's minimum level of solvency has been reduced from $50 million to $25m, recognising the reduced risk of Canterbury earthquake related insurance claims.
Tower chief executive Blair Turnbull said the decision was welcome and the company would retain a strong balance sheet.
Its solvency margin as of September last year was $140m and following the RBNZ decision it was now $115m above the new minimum.
"The remaining $25m licence condition will be maintained due to residual uncertainty related to the Canterbury earthquakes, which Tower is confident is both reducing and is being managed effectively," Turnbull said.
Tower settled with the Earthquake Commission over outstanding Canterbury earthquake claims last November, which boosted its finances by $42m.
The solvency level would be reviewed by the Reserve Bank in a year, he said.
"This change is another positive step forward for Tower which has continued to strengthen its capital and solvency structure while investing in new digital technologies."