Bond sales for quake claims

Finance Minister Bill English. Photo / Mark Mitchell

The Government yesterday cleared the Earthquake Commission to sell some stocks and bonds to raise cash for claims from the Christchurch earthquake.

The state-owned disaster insurer expected to handle as many as 100,000 claims with a potential cost of as much as $2 billion after the magnitude-7.1 quake struck the South Island city on September 4, Finance Minister Bill English said.

The commission's Natural Disaster Fund had $6 billion in bonds, stocks and bank bills at the start of September, he said.

"The Government has issued a new ministerial direction to enable the commission to sell down assets in sufficiently large amounts to produce cash, and to give it the ability to hold more cash than it used to so that it can pay out claims promptly," English said yesterday in response to questions in Parliament.

The direction would allow the commission to hold as much as $2 billion in cash or short-term securities at New Zealand banks, rather than the present $250 million limit, he said.

English said that after the commission had paid $1.5 billion, reinsurance arrangements would be triggered.

- BLOOMBERG