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Source: ONE News -
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A "reconfigured" AMI Insurance has been bought by International Australia Group (IAG) for $380 million.
But it is leaving all customers that have claims related to the Canterbury earthquake in the control of the Government.
IAG, which already owns NZI and State Insurance in New Zealand, will pay $380 million for a new AMI company of almost 500,000 customers with some 1.2 million insurance policies, mainly for houses, contents and cars.
All quake related business will be left with the existing company which will be owned and backed by the Government but given a new name.
IAG's New Zealand CEO, Jacki Johnson, said the long established AMI general insurance business is an ideal fit for it and vowed to be a committed guardian of the AMI brand.
"We are impressed with AMI's business, people and brand and we will be focusing on building on these strengths to help us increase our presence in the New Zealand market," she said.
IAG needs to obtain the consents from the Reserve Bank, Commerce Commission and Overseas Investment Office for the deal to go through but AMI chairman Kerry Nolan said in the meantime it's business as usual.
"When there are any changes that customers need to know about, we will contact them well in advance," he said.
Resolving earthquake claims
The old company will have the financial backing of the Crown, which already provided a back-up support package for AMI in April this year when it emerged that the insurer was over-exposed in Canterbury and may breach its reinsurance levels.
Estimates of the cost of resolving AMI's earthquake claims continue to increase, but are currently around $1.8 billion.
The Government will fund whatever shortfall eventuates over the next few years, as claims are progressively settled, and has budgeted over $300 million for this purpose.
"The February earthquake created a very serious loss of capital for AMI, and it is gratifying that just nine months on we are able to announce a conditional new arrangement which promises strength, certainty and continuity," Nolan said.
IAG is an international company with operations in Australia, New Zealand, the United Kingdom and Asia.
