21 Dec 2011

IAG begins seeking approval for AMI purchase

5:29 am on 21 December 2011

IAG has applied to the Commerce Commission for clearance to buy AMI Insurance for $380 million.

As part of the deal, IAG will take over AMI's nearly 500,000 customers, but not the $1.8 billion of claims relating to the Canterbury earthquakes. The Crown is taking ownership of those claims.

The Commerce Commission is one of three regulatory bodies that need to approve the sale.

It says it will determine whether the purchase will substantially lessen competition in the insurance market.

The sale also needs to be cleared by the Reserve Bank and the Overseas Investment Office.

Meanwhile, Finance Minister Bill English says the Government has started setting up a new company to manage the claims it is taking over.

He said the Government expects the loss to be around $100 -$150 million over the $1.18 billion of claims.

Mr English says the insurance market in Christchurch is starting to move again, and AMI's sale will add to the momentum.

"People are getting contracts, getting insurance cover for the building activity, and also ongoing insurance cover

"We expect IAG, as the new owners of AMI and who now cover around half the market, to be offering ongoing insurance to all those existing customers."

The Government has appointed Nelson-based company director Ross Butler to chair the new Crown company.

Mr Butler at present chairs the Nelson Marlborough Institute of Technology and is deputy chairman of GNS Science.