AMI Insurance begins a new era under IAG ownership, government company takes responsibility for settling earthquake claims

5 April 2012

Long-established AMI Insurance has begun a new era under the ownership of Australia and New Zealand’s largest insurance group IAG.

At the same time, a government-owned company, Southern Response, based in Christchurch, has become responsible for settling all claims by AMI customers for earthquake damage which occurred prior to today.

With the completion of the transactions, AMI’s 500,000 customers (including CLIC Car Insurance customers) have had their insurance cover transferred automatically to a new company, sold to IAG and trading under the AMI name, without having to take any action at all and their insurance cover will continue unchanged.

AMI policyholders with earthquake-related claims are now customers of both the ’new AMI’ and Southern Response until their earthquake claim is settled. Southern Response is also financially responsible for a small number of claims resulting from events occurring before today, such as those arising from the recent Nelson floods, which were not part of IAG’s purchase of AMI, although these claims will still be managed by AMI.

AMI will be responsible for all claims for earthquakes and other events occurring after today.

Separation of AMI into two companies and the change of ownership came into legal effect around noon today. Both companies will operate with limited hours over the Easter weekend and will open for business, fully operational, at 8.30 a.m. on Tuesday morning.

Approvals for transactions

The Reserve Bank, which supervises insurance companies in New Zealand, today issued an insurance licence to the new AMI business, allowing the purchase of this new company by IAG Insurance.

The transactions had previously been approved by the Commerce Commission and the Overseas Investment Office.

ormer AMI Chairman Kerry Nolan says the previous company’s Board, which resigned to coincide with the changeover, unanimously endorsed the split as being in the best interests of all policyholders and the sale of AMI to IAG as bringing further financial security to policyholders.

“From a very difficult situation early last year following the first major earthquakes in Canterbury, a situation has been achieved – with the Government’s help – where all policy holders have had certainty that their claims could be met in accordance with policy terms, the well-known AMI brand has been preserved and all customers continue to have appropriate cover available to them,” said Mr Nolan.

Government assistance

AMI, established in 1926, announced in April last year that it had sought and received financial support from the Government to enable it to meet the unprecedented level of expected claims resulting mainly from the February 22 earthquake.

A Crown Support Deed provided the assurance of capital support necessary to give AMI the time to seek a new investor and new capital to strengthen the financial position of the company.

In December last year it was announced that the company would separate into two, with the Government retaining responsibility, through a completely separate company, for settling the earthquake claims from major events prior to separation, and a new company to contain the ongoing AMI business (including CLIC Car Insurance) being conditionally sold to IAG Insurance.

Legal separation has now been achieved so that the two companies will operate quite independently, under different ownership.

IAG to build on AMI's strengths

CEO of IAG’s New Zealand business, Ms Jacki Johnson, said IAG was pleased to be able to bring certainty to AMI’s 500,000 customers by successfully concluding the purchase.

“AMI is a fantastic brand with a strong and proud heritage. We are thrilled to welcome a business that fits well with our strategic direction and has such a strong market presence, together with loyal customers and dedicated professional staff.

“With AMI, we will be able to offer more choice as to how and where customers interact with us.
“Our focus is now on achieving a smooth integration and looking for ways to prove our worth to customers through our expanded direct insurance network.”

IAG is New Zealand and Australia’s leading insurer which owns State Insurance, NZI Insurance and underwrites general insurance for some of New Zealand’s leading financial institutions. IAG employs more than 2000 staff servicing a network of nationwide call centres, 28 sales centres and eight branches.

For more information contact:

Tel: 027 405 9335