AMI stays profitable after stormy year

By KEVIN TAYLOR

Personal insurance mutual AMI withstood "weather bombs" and the storm on investment markets to achieve a net profit of $12.1 million for the year to June.

The result for the Christchurch-based insurer, which employs more than 600 staff, was 30 per cent down on the previous year's $17.4 million.

Chief executive John Balmforth said it was achieved on an increase in premium revenue of 6 per cent - from $174 million to $185 million. Claims costs rose by 10 per cent to $129.8 million.

About three-quarters of the extra premium income resulted from new business. During the year, premiums increased less than the rate of inflation.

Balmforth said investment income fell from $15.6 million to $11 million, but still made a strong contribution to profits. "This is an excellent result when the challenges that the insurance industry faced in 2001-2002 are considered," he said.

Several big storms, including the Coromandel "weather bomb" early this year, caused substantial property damage and cost the industry money.

The flow-on from the September 11 terrorist attacks also drove up reinsurance costs and weakened investment returns.

"Despite these pressures, AMI has achieved an excellent result. The company's underlying position is very strong," Balmforth said.

"We have continued our growth trend over the last few years, which has seen AMI achieve a steady improvement in market share, reflected in increased premium income and policy numbers."

The mutual's total assets now stand at a record $250 million, compared with $176.5 million in 1998.

Balmforth said AMI was second in the market in motor vehicle and house and contents insurance.

He said AMI increased its staff numbers by 26 to 611 during the year. It would maintain its network of 68 branches and 27 agencies.

"In addition, the efficiency of the organisation is demonstrated by an improvement in the management-expense ratio."

Balmforth said the year's good performance had boosted AMI's reserves from $137 million to $150 million, up almost 10 per cent.

The annual report revealed AMI revised its policy on share investments three years ago, and at the beginning of this year had no exposure to the American investment markets and minimal exposure elsewhere in the world. Shares represented only 12 per cent of AMI's investment portfolio.

AMI board chairman Kerry Nolan said it was expected investment markets would continue to face downward pressure for some time yet.