Govt confirms 'close interest' in AMI's plight
The government has confirmed it is closely watching the impact of the two Christchurch earthquakes on locally-based AMI Insurance.
The government has confirmed it is closely watching the impact of the two Christchurch earthquakes on locally-based AMI Insurance.
Industry sources say its $1 billion of capital and reinsurance cover will not be enough to cover the scale of the claims, and that it will need to raise new capital to stay in business.
As a mutually-owned insurer, which writes a third of all homes, contents and motor vehicle policies in Christchurch, it will need to seek a merger with another insurance company or a Reserve Bank-assisted bailout.
This could mean the government offering to underwrite or guarantee a capital raising and allow AMI to buy more reinsurance cover to meet future claims.
A spokesman for Finance Minister Bill English said he was aware of the speculation about AMI's future and said that the Reserve Bank and the Treasury were taking a close interest in it "as it would be a significant issue."
Earlier this month AMI said it was looking at options to raise money to help pay claims from the February 22 earthquake. AMI had $600 million of reinsurance cover for the February quake and about $500 million in cash and investments.
NBR staff and NZPA
Thu, 07 Apr 2011
Thu, 07 Apr 2011
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Govt confirms 'close interest' in AMI's plight
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