Government takes responsible approach to AMI

Documents released today show the Government has taken a balanced and responsible approach in providing a back-up financial support package for AMI policyholders, Finance Minister Bill English says.

Treasury today proactively released a range of documents on its website relating to the Government's $500 million back-up support package, which was announced on 7 April.

"The support package, which will be called on only as a last resort, gives policyholders certainty, helps ensure an orderly rebuild of Christchurch and gives AMI the time to seek a market solution to the challenges it faces as a result of the two Canterbury earthquakes,” Mr English says.

"Since the package was announced, the Government has been engaging constructively with AMI."

The Crown has appointed a director to AMI's board and inspectors have been appointed to assist the Crown in monitoring the company. Treasury officials have had a number of meetings with AMI's management and processes have been put in place to ensure the company keeps officials informed of developments.

"The implications for the Crown accounts of the support package are still very uncertain and will remain so for a number of months as AMI continues to assess earthquake claims," Mr English says.

"Due to this high level of uncertainty, next week's Budget documents will take a cautious and conservative approach to measuring the potential costs of the package even though the Crown may never have to make a payment."

The Crown has the capacity, if necessary, to direct the operating and governing policies of AMI and take control of the board through its option to make a partial payment. The Crown is also directly impacted by the risks or benefits of AMI’s operations because of the support package.

"As a result, Treasury expects to include AMI – including its full assets and liabilities - in the consolidated Crown accounts when it completes the 2010/11 year-end accounts in October," Mr English says.