Govt welcomes completion of AMI sale

The sale of AMI Insurance to IAG, completed today, will provide certainty for policyholders, strengthen the Canterbury insurance market and reduce the likely cost to the Crown, Finance Minister Bill English says.

The Reserve Bank today joined the Commerce Commission, Financial Markets Authority and Overseas Investment Office in giving approval to the sale.

As part of the deal, the Crown takes over ownership of AMI Insurance’s Canterbury earthquake related claims, while IAG will own and manage AMI's ongoing insurance business under the AMI brand.

The earthquake claims will be held by a new Crown company, Southern Response Earthquake Services Ltd, which will continue to manage those claims, ensuring little or no disruption to customers.

"The Government's backstop support for AMI was to ensure certainty for policyholders and for the Canterbury rebuild," Mr English says. "This deal gives AMI policyholders certainty their earthquake claims will be met and they will continue to have insurance cover.

"As part of the deal, IAG has agreed that it will continue to offer insurance to AMI’s customers, as well as all of its existing customers, on renewal and transfers throughout New Zealand. We welcome this assurance, which will ensure ongoing insurance cover for 60 per cent of the Canterbury market.

"The purchase of AMI for $380 million also reduces the estimated final cost of Crown support for AMI from $335 million, in the 2010/11 Crown accounts, to about $100 million once all claims are paid out.

"However due to continuing uncertainty over estimates of earthquake liabilities, the actual cost will not be clear for a number of years.

"The Government has made it clear that helping to rebuild Christchurch is one of its most important priorities. The sale of AMI will help meet that goal," Mr English says.