Archive | Insurance companies

IAG files Lumley acquisition clearance application

Insurance Australia Group Ltd said on Monday it had agreed to buy the insurance underwriting businesses of Wesfarmers Ltd, which includes the business trading under the Lumley Insurance brand in New Zealand.

On Friday, the Commerce Commission said it had received an application from IAG (NZ) Holdings Ltd (IAG) seeking clearance to acquire 100% of the shares in Lumley General Insurance (NZ) Ltd.

The commission is due to make its decision by Friday 24 January.

IAG’s New Zealand chief executive, Jacki Johnson, said the Lumley operations would be brought together with IAG’s NZI business, securing its position as the leading provider of insurance solutions through the country’s trusted broker network.

“Lumley in New Zealand has very complementary strengths, such as its expertise in the commercial motor vehicle & professional indemnity insurance segments, and IAG will look to build on these strengths to broaden our offering to our customers & partners.”

Lumley in New Zealand offers commercial insurance products through brokers and personal insurance through a partnership with Westpac (NZ) Ltd.

This transaction is part of a wider acquisition by IAG of the insurance underwriting companies of ASX-listed Wesfarmers, trading under the WFI & Lumley Insurance brands, for $A1.845 billion. Ms Johnson said the acquisition was expected to be completed in the second quarter of calendar 2014.​

Attribution: Company & commission releases.

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Tower goes to court over EQC payout policy

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.

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Western Pacific Insurance liquidators pay reinsurance premiums, give policyholders hope

Published 10 June 2011

The liquidators of Queenstown-based Western Pacific Insurance Ltd have paid the company’s reinsurance premiums, giving hope for Christchurch policyholders affected by the September 2010 & February 2011 earthquakes.

David Ruscoe & Simon Thorn (Grant Thornton NZ Ltd) were appointed liquidators of Western Pacific (Jeffrey McNally, Melbourne; & Graham Smolenski, Queenstown) on 1 April. At the end of April they cancelled all insurance policies held by the company because they were they were unable to sell, transfer or assign the business.   However, the liquidators said in a report to policyholders yesterday that, by paying the reinsurance premiums, they hoped about $35 million would be available for Canterbury earthquake claims.   “This entire process will take time as there are many questions still unanswered. We have applied to the courts for guidance, especially around who is entitled to potential reinsurance proceeds, which could take up to 6 months for clarification.   “Being able to pay the reinsurance premiums was a major milestone, as the company has no money and we were appointed on the day the premiums were due, but we managed to borrow the necessary funds to cover the payments.”   The liquidators said one of their key tacks at present was to assess the claims that had already been made: “We will not be in a position to make any repayments until all claims have been received & assessed – that is why it is important for those who are yet to make claims to do so as quickly as possible.”   The liquidators said there would be a shortfall in funds: “The Canterbury earthquake has been a major factor. Of the $41.2 million in claims to date, about $35.2 million is a result of the earthquakes – $14.5 million from the September earthquake and $20.7 million from February.   “We are also reviewing the performance of the directors to ascertain whether there are any actions available to us to recover funds for creditors. These actions can include claims for reckless trading, entering into transactions when insolvent and certain voidable preference payments.”   The liquidators hope to report to policyholders again by 31 July.

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Attribution: Liquidators’ release, story written by Bob Dey for the Bob Dey Property Report.

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Government props up AMI Insurance

Published 8 April 2011

The Government said yesterday it would provide a back-up financial support package for AMI Insurance Ltd to give policyholders certainty and to ensure an orderly rebuild of Christchurch in the aftermath of the 2 earthquakes.

Finance Minister Bill English said the support package would be called on only as a last resort if AMI’s own reserves have been exhausted – unless the Government believes it is in the public interest to take control sooner.

AMI has paid the Government a $15 million up-front establishment fee for the support package and has issued convertible preference shares to the Government, but the Government has not yet paid for them. “AMI tells us that if payment is required, it may not need to happen for 2 years,” Mr English said.

He said the support package would give AMI the time to seek a market solution – to find alternative funding.

If the package is called on, the Government would invest up to $500 million of equity in AMI, with the right to take ownership and assume control of the company if it needs to.

Christchurch-based AMI Insurance is New Zealand’s second-largest residential insurer with 485,000 policyholders & 1.2 million policies. After a concerted campaign to grow its business in Christchurch, it has 85,000 policyholders with 225,000 policies there – about 35% of the residential insurance market in the city.

Mr English said AMI approached the Government on 9 March, concerned that its reserves & reinsurance might not be enough to cover the total value of claims resulting from the Canterbury earthquakes.

“It was the Government’s judgment that a support package was necessary to give certainty to policyholders that their claims will be covered. This applies to all AMI policyholders – not just those in Christchurch. Because of uncertainty around the cost of earthquake damage, it is too early to tell whether AMI will have sufficient resources to cover all of these claims. The full extent of the claims AMI faces will remain unclear for several months.

“The alternative of doing nothing would likely have been severe, potentially leaving many thousands of AMI policyholders without the insurance cover & financial resources needed to rebuild. It would also have led to long delays in processing claims, other claims being only partially met and many of AMI’s customers in Christchurch not having insurance cover for future risks.”

“Events such as this show the importance of getting the Government’s finances back into good shape as soon as possible. The Government remains committed to returning to budget surpluses and this arrangement doesn’t alter that commitment.”

The AMI package comes on top of 2 other hits from the earthquakes and the collapse of the finance sector. The Government’s accounts for the 8 months to February, released last Friday, include an estimate of the Earthquake Commission’s net cost of $1.5 billion and a $331 million increase in the Government’s expected loss from the retail deposit guarantee scheme, which covered eligible depositors in failed financial institutions.

Mr English said most of the guarantee increase was attributable to a reduction in expected related-party loan recoveries from the receivership of South Canterbury Finance Ltd. The increase resulted from updated information on South Canterbury’s lending business provided by the receivers.

"Overall, we now expect a net loss from the retail deposit guarantee scheme of around $1.2 billion, compared with earlier estimates of around $900 million."

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Attribution: Ministerial releases, story written by Bob Dey for the Bob Dey Property Report.

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