FMG Grows its business in Australia and NZ
FMG Grows its business in Australia and New Zealand
New Zealand’s leading rural insurer FMG is on target to book a 25 percent increase in premium income from its Australian business in 2002/2003 despite considerable turbulence and uncertainty within the sector.
Palmerston North based FMG earned NZ$22.2 million in premium income in the 2001/2002 financial year from its Australian operation and FMG’s General Manager of Sales and Marketing David Clapperton said the company was on track to eclipse that by about 25 percent in 2002/2003. Last year FMG’s claims ratio in Australia was 64.6 percent and this year it’s improved to about 60 percent, having not been affected by the recent fires in ACT and Victoria.
“Our Australian operation is performing strongly. Our growth and claims ratio was one of the best results in Australia last year and we’ll have bettered that performance in the 2002/2003 financial year,” Mr Clapperton said.
“Last June we started trading in Southern Queensland, we’re expanding our operations in New South Wales and Victoria, as well as ACT and Tasmania and we have brokers knocking on our door wanting us to underwrite their business in both the rural and commercial sectors.”
Mr Clapperton said the Group’s performance is particularly heartening as it has occurred when the Australian market was reeling in the wake of the HIH Insurance collapse and the bush fires. FMG’s Australian operation makes up 30 percent of the Group’s revenue.
“For insurers internationally and domestically the last two years have been extremely tough. At FMG we’ve been careful not to stray from what we are good at which is servicing the farming and rural sector and all the businesses and communities that support those sectors. “
Mr Clapperton anticipated that premium income growth in New Zealand for FMG will be solid. It was tracking at about 16 percent after a strong performance in March while the claims ratio was a respectable 65 percent.
FMG has had its credit rating of A- (Excellent) reaffirmed by international ratings agency AM Best at a time when other prominent insurance companies are being downgraded. A strong credit rating shows a company is in good health and well able to pay its claims.
The international insurance
sector was still suffering the effect of the fallout from
the terrorist attacks of September 11, 2001 which cost the
industry NZ$120 billion. Weak global investment markets have
further hampered the sector, especially over the past two
years. …. / 2
FMG has a 35 percent share of New Zealand’s rural insurance market, making it the leading provider to rural communities. Its customers include farmers and agribusinesses such as wineries, tradespeople, moteliers and businesses that service the rural sector in provincial towns.
Looking ahead, FMG predicts the international insurance market will remain uncertain for some time in the wake of weak investment markets, significant increases in reinsurance premiums – with some having risen by as much as 100 percent, and war and political unrest in the Middle East.
Mr Clapperton also cautioned farmers and other rural businesses trying to offset lower returns from falling commodity prices by slashing costs.
“Often accountants advise farmers and businesses to look at their costs such as insurance. There is a downside to that because it puts greater risk on the farmer and the floods and fires we’ve seen in Australia show that calamities can occur.
“Farmers and business are better off focusing on productivity growth and letting their insurer carry the risk. We urge farmers and rural businesses to avoid cutting replacement values or hiking up their excesses.”
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