AMI interest shows Christchurch is an active market - PM

AMI Insurance headquarters in Auckland. File photo / David White

The "widespread interest'' being shown in AMI Insurance by potential buyers is an encouraging sign the insurance industry regards Christchurch as an attractive market, Prime Minister John Key said this morning.

AMI Insurance, which has a $500 million financial guarantee from the Government to bridge a potential shortfall in funds available to meet Christchurch quake claims is now officially seeking new capital from potential investors.

The company last week said if was able to find new capital it was unlikely to require the $337 million the Government believes it will have to pay out under the guarantee.

The AMI affair has played out against a backdrop of mounting concern that the reluctance of international reinsurers to offer backing to Christchurch exposed insurance companies is preventing them from offering new policies thereby delaying rebuilding efforts.

Mr Key this morning acknowledged that insurance was an issue that had yet to be resolved.

"But we remain confident from discussions (Earthquake Recovery Minister) Gerry Brownlee has had with reinsurers that they will come back.''

Reinsurers were looking for evidence that seismic activity in Christchurch was tailing off.

"The advice we see is it is slowing down'', said Mr Key.

"That's a really good sign, if we can carry on having less movement in Christchurch in time the insurance companies will come back and new players will come in - my understanding is there's been a lot of interest in AMI.''

Mr Key said that interest in AMI was coming from potential investors "right around the world''.

"That's why I'm not convinced that the insurance markets will close in New Zealand forever.''

The economic stimulus of the Christchurch rebuild is one of the factors Mr Key believes will help cushion New Zealand from the impact of the European debt crisis and prospect of double dip recessions in both Europe and the US.

"Whatever happens in the world we're going to spend $20 to $25 billion in Christchurch over the next five six or seven years.''