AMI recovers after tough year but harder times still ahead

By PAULA OLIVER

Mutual insurer AMI has rebounded from a tough year, posting an annual profit of $19.4 million - but its chief executive warns that a return to harder times lies ahead.

AMI, whose main business is motor vehicle insurance, is the country's largest locally owned fire and general insurer.

It has posted mostly steady results for the past five years, but experienced a dip last year when its net profit fell to just over $12 million.

Chief executive John Balmforth was happy yesterday to be able to reveal a big recovery.

"Given the market conditions, we think our result is quite outstanding," Balmforth said. "It's returned us to what we might regard as a sort of long-term average performance."

AMI's profit last year was hit by numerous severe-weather claims, a fall in investment income and an increase in the cost of claims.

Balmforth said this year's recovery came after an increase in premium income, which he claimed came mostly from business growth rather than higher charges.

AMI wrote just over $200 million in premiums during the year, and its claims cost $132 million.

Balmforth said claim numbers had increased in the second half of the year to June 30, particularly from two-car motor vehicle accidents and burglaries.

That meant it was unlikely that the company could match this year's profit.

"We anticipate that after-tax profit next year will actually be lower than what we've recorded this year. It will reflect market conditions. The cost of claims will be a main driver in that."

AMI put up its premiums at the beginning of this financial year to cover increasing costs.

Balmforth said the 77-year-old company had no plan to demutualise. "We looked at it in 1997. There's no apparent reason to do it."