FMG Grows its business in Australia and New Zealand
New Zealand’s leading rural insurer FMG is on target to book a 25 percent increase in premium income from its Australian
business in 2002/2003 despite considerable turbulence and uncertainty within the sector.
Palmerston North based FMG earned NZ$22.2 million in premium income in the 2001/2002 financial year from its Australian
operation and FMG’s General Manager of Sales and Marketing David Clapperton said the company was on track to eclipse
that by about 25 percent in 2002/2003. Last year FMG’s claims ratio in Australia was 64.6 percent and this year it’s
improved to about 60 percent, having not been affected by the recent fires in ACT and Victoria.
“Our Australian operation is performing strongly. Our growth and claims ratio was one of the best results in Australia
last year and we’ll have bettered that performance in the 2002/2003 financial year,” Mr Clapperton said.
“Last June we started trading in Southern Queensland, we’re expanding our operations in New South Wales and Victoria, as
well as ACT and Tasmania and we have brokers knocking on our door wanting us to underwrite their business in both the
rural and commercial sectors.”
Mr Clapperton said the Group’s performance is particularly heartening as it has occurred when the Australian market was
reeling in the wake of the HIH Insurance collapse and the bush fires. FMG’s Australian operation makes up 30 percent of
the Group’s revenue.
“For insurers internationally and domestically the last two years have been extremely tough. At FMG we’ve been careful
not to stray from what we are good at which is servicing the farming and rural sector and all the businesses and
communities that support those sectors. “
Mr Clapperton anticipated that premium income growth in New Zealand for FMG will be solid. It was tracking at about 16
percent after a strong performance in March while the claims ratio was a respectable 65 percent.
FMG has had its credit rating of A- (Excellent) reaffirmed by international ratings agency AM Best at a time when other
prominent insurance companies are being downgraded. A strong credit rating shows a company is in good health and well
able to pay its claims.
The international insurance sector was still suffering the effect of the fallout from the terrorist attacks of September
11, 2001 which cost the industry NZ$120 billion. Weak global investment markets have further hampered the sector,
especially over the past two years. …. / 2
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FMG has a 35 percent share of New Zealand’s rural insurance market, making it the leading provider to rural communities.
Its customers include farmers and agribusinesses such as wineries, tradespeople, moteliers and businesses that service
the rural sector in provincial towns.
Looking ahead, FMG predicts the international insurance market will remain uncertain for some time in the wake of weak
investment markets, significant increases in reinsurance premiums – with some having risen by as much as 100 percent,
and war and political unrest in the Middle East.
Mr Clapperton also cautioned farmers and other rural businesses trying to offset lower returns from falling commodity
prices by slashing costs.
“Often accountants advise farmers and businesses to look at their costs such as insurance. There is a downside to that
because it puts greater risk on the farmer and the floods and fires we’ve seen in Australia show that calamities can
occur.
“Farmers and business are better off focusing on productivity growth and letting their insurer carry the risk. We urge
farmers and rural businesses to avoid cutting replacement values or hiking up their excesses.”
FMG will celebrate its centenary in New Zealand in 2005.