by The Landlord
The Government is prepared to pump up to $500 million of equity into AMI Insurance after it reportedly had $1 billion of capital and reinsurance cover wiped out by the two Canterbury earthquakes.
The support package would be called on only as a last resort of AMI's own reserves have been exhausted - unless the Crown believes it is in the public interest to take control sooner, Finance Minister Bill English said today.
"This support package will give AMI the time to seek a market solution to the challenges it faces as a result of the two Canterbury earthquakes," he said.
Christchurch-based AMI is the country's second-largest residential insurer with 485,000 policyholders and 1.2 million policies across the country.
In Christchurch alone it has more than 85,000 policyholders with 225,000 policies - or about 35% of the residential insurance market in the city.
"Ministers have decided to act now. This provides a financial backstop for policyholders so the rebuilding of Christchurch is not jeopardised by potential solvency or liquidity issues and so confidence is maintained in the insurance sector."
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