Christchurch Four Years On - Cam Preston - Insurance Update

Cam Preston – Chartered Accountant & Claimant:

1. Progress Statistics2. Financial Situation

1. Progress

Claims vs Properties

Progress

Progress - EQC “The Foundations of your Foundation”

Unsettled Properties25,175

Settled Properties54,714

EQC Properties with a Land Claim - 31 Jan 2015

68%32%

EQR - Under repair or scheduled for repair, 3,527

EQR - On Hold (mostly at the customers request), 1,247

EQR - Pending the receipt of specialist reports or consent

forms, 795

Non EQR - Opted for self repair and in progress,

2,980

Non EQR - Scheduled for cash settlement, 1,578

EQC "Unresolved" Properties with a Building Claim as at 31 January 2015

Progress - EQC

39% 42%

50% 55% 59%56%

37% -

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Pro

per

ties

Insurer Over EQC Cap Properties as at 31 Jan 15

Company: IAG Southern Response Tower Vero Lumley AA MAS Others Branding: State/NZI/ ex AMI Westpac FMG

Lantern/ASB/BNZ (Lumley now owned by IAG)

?

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Pro

per

ties




?

53%42%

34%40%

25%35%

47% -

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Pro

per

ties




?

Red ZoneRed Zone

Port Hills

Port HillsTC2TC2

TC3 TC3

Red Zone

Port Hills

Port Hills

TC2

TC2

TC3

TC3

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Pro

per

ties

IAG Southern Response Tower AA Others

Insurer Progress by Land Zone to 31 Jan 15

Opted for Cash Settlement Red Zone Opted for Cash Settlement Port Hills

Total Claims Settled Claims Total Claims Settled Claims

IAG Southern Response

Rebuild and Repair

Programmes

Cash Settlement

Programmes

IAG

Port Hills Rebuilds (336)

34 or 10.1%

Southern Response - Completed

TC3 Repairs (831 estimated)

116 or 13.9%

IAG - Completed

TC3 Rebuilds (1,014)

40 or 3.9%

IAG - Completed

TC3 Repairs (1,261)

20 or 1.6%

15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000

Dec2012

Mar2013

Jun2013

Sep2013

Dec2013

Mar2014

Jun2014

Sep2014

Dec2014

Total "Over EQC Cap" Properties per Insurance Council of New Zealand

Total Over Cap Properties

2. Financial Situation

Financial Situation - Basic Premise

International Reinsurers pay for catastrophes

up to an agreed limit.

Local Private Insurers pay for catastrophes when those limits are exceeded

Underwriting Profit v Investment Profit

1. The less an insurer has to pay out on claims the higher it’s underwriting profit x

2. The bigger the ‘float’ (money that doesn’t belong to insurers but they can invest for there benefit) the bigger their investment profits

Financial Situation - Basic Premise

$(50)

$-

$50

$100

$150

$200

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

IAG Group NZ Division - Underwriting Profit vs Investment Income

IAG NZ Division - Investment Income.

IAG NZ Division - Underwriting Profit(Loss).

Financial Situation - Private Insurers - IAG

Financial Situation - Private Insurers – IAG

LOSS CREEP:

Financial Situation – Southern Response

Financial Situation - Tower

Financial Situation – Private Insurers - Vero

Financial Situation - EQC

Pre Quakes EQC had $10 billion.

However damage caused by Canterbury Earthquakes was

$12 billion

Financial Situation - EQC

SUMMARY

- 25,000 Unsettled Properties with EQC Land Claims

- 10,000 Unsettled Properties with EQC Dwelling Claims

- 10,000 Unsettled Properties with Private Insurer Dwelling Claims

- 46% of Private Insurer Settlements have been cash

- 11% have been via Rebuild or Repair – Pipeline is slow/blocked

-EQC trying to bridge its ‘gap’ so its doesn’t have to put hand out to Government for cash.

-SR will have to put hand out to government for cash soon

-Reinsurance limits looming for other private insurers

-2014 reinsurers took a ‘big hit’, who will take the hit in 2015 and beyond?

Christchurch Four Years On - Cam Preston - Insurance Update

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