AMI Bucks the Financial Trend

AMI INSURANCE LIMITED

MEDIA RELEASE: AMI Insurance
2008 ANNUAL RESULT

Embargoed until 5:00pm Wednesday 12 November 2008

AMI Bucks the Financial Trend

The country’s largest wholly New Zealand owned fire and general insurer, AMI Insurance, has bucked the trend of poor results in the financial and insurance industries.

With growth in Written Premiums, a falling ratio of management expenses to premiums, and a very satisfactory return from investments, AMI has posted a $26.9 million Net Surplus after Tax for the year ended 30 June 2008, similar to last year’s result of $28.4 million. AMI’s sustained high level of performance has earned the company an upgrade to its financial rating by international rating agency A. M. Best Co. from its current ‘A’(Excellent) to ‘A+’ (Superior).

In upgrading AMI’s rating A. M. Best Co. reported, “The superior capital position of AMI, consistent profitability and well-established business profile in the New Zealand market supports the current rating upgrade for the company”.

“Given the market and economic conditions and a record year of growth in both customer and policy numbers, this was an outstanding result,” says John Balmforth, AMI Chief Executive.

In addition to the improvement in its rating AMI’s Solvency Margin has continued its steady upward climb and at 120%, the highest in the industry, it enhances member security. AMI is a mutual company, owned by its policyholders.

Claims Costs, which increased by nearly 13% to $189.9 million, were impacted by claims cost increases in the housing portfolio. A number of localised storms, flooding and numerous land slips in Auckland, Wellington and the North Canterbury areas in particular, caused substantial damage. Escalating building repair costs also influenced the housing claims costs throughout the 2008 financial year.

Mr Balmforth says the most pleasing result from a financial point of view was AMI’s investment portfolio. “We had growth of 34.2% in our investment returns which is very satisfying. While we do not expect the same level of return in the current financial year, our conservative investment policies have paid off. We have minimal exposure to the risky elements in the market.”

AMI’s result is all the more remarkable when the level of value the company has been returning to its customers is considered. AMI is a mutual company which rewards customers for their loyalty through discounts on premiums and extended no claim bonus protection.

Over the last three years AMI has returned almost $15 million of value to customers through freeBmax®, its maximum No Claims Bonus protection.

“We have been able to share our good fortune with our customers and at the same time achieve growth and advance the secure status of the company,” says Mr Balmforth.

Mr Balmforth attributes the success of the company to keeping the customer at the centre of its business.

“Our customers talk face-to-face to staff though our branch network – it’s a personal relationship and our customers value that. We are proud of the fact that with 73 branches we have the largest company-staffed branch network in the New Zealand fire and general insurance industry. The branch network is supported by our two call centres, 22 agencies and our internet site ami.co.nz

“This excellent financial result will give customers even greater confidence that their insurance company is in a strong financial position. It also means we have a sound base from which we can provide further benefits to our members,” says Mr Balmforth. “The result is also a compelling endorsement of the outstanding customer care provided by our staff.”

AMI Five Year Financial Summary ($ millions)

/ 2004 / 2005 / 2006 / 2007 / 2008
Written Premiums / 229.3 / 243.4 / 251.3 / 262.0 / 278.7
Net Surplus After Tax / 25.4 / 30.1 / 30.6 / 28.4 / 26.9
Cost of Claims / 142.6 / 151.7 / 160.0 / 168.2 / 189.9
Total Assets / 325.2 / 370.7 / 410.2 / 438.6 / 475.7
Solvency Margin (percentage) / 86.9 / 96.0 / 108.7 / 117.8 / 120.5

Note: All figures are presented on the basis of the New Zealand International Financial Reporting Standards.

ENDS

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