Lyttelton Port sues broker Aon for $184m over quake insurance

Lyttelton Port Co [NZX: LPC], which was taken private by owner Christchurch City Council last year, is suing insurance broker Aon for $184 million over the handling of its policies during 2010 and 2011 earthquakes that resulted in the South Island's biggest marine hub settling with its insurers.

The port company filed a statement of claim in the High Court in Christchurch on June 29 seeking damages plus interest and costs, saying "Aon was negligent and in breach of contract in arranging LPC's property insurance programme for the period covering June 30, 2010, to June 30, 2011," according to a contingent liability notice in Aon's group earnings filed to the US Securities and Exchange Commission.

"LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010/2011 Canterbury earthquakes," it said.

Lyttelton Port reached a settlement with insurers Vero, NZI and QBE in 2013 for $450 million minus deductions of $11.7 million. It had already received $55.6 million from its insurers, and said at the time that an issue with a third party was still outstanding and might lead to an additional recovery.

The port company notes the action in its 2015 annual report, saying Aon filed a statement of defence on August 4 rejecting the claim.

Lyttelton Port's directors said they were confident in their case but weren't able to estimate the chances of success or the final amount that may be awarded, while Aon said "it has meritorious defences and intends to vigorously defend itself against these claims."

The port company has embarked on a long-term redevelopment plan after the earthquakes, and plans to expand its container terminal capacity to cope with a forecast doubling of volumes over the next decade, and dredging the harbour to allow for bigger vessels.

Lyttelton Port reported a profit of $20.6 million on revenue of $109.1 million in the year ended June 30, compared to a profit of $343.9 million, which included the insurance settlement a year earlier.

Aon NZ Group, the local holding company, reported a profit of $10.3 million on revenue of $176.2 million in calendar 2014, according to its latest financial statements lodged with the Companies Office.

(BusinessDesk)