By Hannah Lynch
The latest swarm of earthquakes to hit Christchurch is unlikely to cause a material increase in the government’s exposure to AMI, the Treasury says.
The Canterbury region has been rattled with aftershocks over the holiday period following a magnitude 5.8 earthquake on Dec. 23, which caused power and phone outages and further liquefaction in the city’s eastern suburbs.
The government is taking on the quake-related claims of AMI, the insurer it bailed outlast year, as part of a deal to sell the rest of the company to Insurance Australia Group. A Crown company will be established as soon as next month to manage AMI’s $335 million worth of earthquakes liabilities, likely to net out at about $120 million after the sale.
The $335 million is “only an estimate at this stage,” said Serene Ambler, spokeswoman for Treasury. “We don’t expect any material change as damage doesn’t look so significant that AMI will incur a significant amount of (new) claims,” Ambler said.
The new Crown company is likely to start in February once the sale of AMI to IAG is completed but until then it is business as usual at AMI, she said.
IAG announced in December it would buy AMI, the Christchurch-based insurer, for $380 million, excluding the earthquake claims.
IAG today said it has finalised catastrophe reinsurance for the 2012 calendar year, with cover of up to $4.7 billion, compared to $4.1 billion in 2011.
The combination of covers in place at 1 January 2012 results in maximum first event retentions of $150 million in Australia, $130 million for New Zealand and $50 million for the UK,” IAG said in a statement to the ASX.