AMI's financial statements to be released on Tuesday morning will show the company has plenty of cash to meet current claims, even after taking into account the recent increase by the Earthquake Commission in the number of major claims by households in Christchurch for damage above the EQC's NZ$100,000 cap, an AMI spokesman said.
The financial statements for the year to June 30, to be released about 10am on Tuesday, would provide an update on the company's ability to pay claims, its recapitalisation programme, its future, and a look at the previous year.
There was currently no problem in terms of AMI’s ability to meet claims, with the company “awash with cash at the moment,” a spokesman told interest.co.nz on Monday afternoon.
AMI had taken EQC’s revised damage estimates into account, which showed more houses had sustained damage above the EQC’s payout cap of NZ$100,000 plus GST, meaning the company would be on the hook for larger costs.
“Our figures are adjusted to take into account the recent EQC increase in its estimate of the number of major claims that we’ll receive,” the spokesman said.
Earlier Prime Minister John Key told a post cabinet news conference that an announcement about AMI would come on Tuesday. He had been asked about the financial state of AMI.
"I think you're going to get better advice on that tomorrow," he said.
See Hannah Lynch's June 30 article about AMI securing reinsurance with one day to sapre.
The government agreed on April 7 to provide AMI with NZ$500 million backstop credit line, although Finance Minister Bill English said at the time Treasury estimates of potential costs to the government could be anywhere up to NZ$1 billion. See our article on that announcement.
"This “backstop” agreement enables AMI to use its own NZ$350 million of reserves in settling claims, in addition to the NZ$600 million of re-insurance available, without being in breach of regulations governing the insurance industry, AMI said at the time.
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