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Customer Growth Drives AMI’s Strong 2007 Result

AMI INSURANCE LIMITED
MEDIA RELEASE ON THE ANNUAL RESULT

Customer Growth Drives AMI’s Strong 2007 Financial Result

The country’s largest wholly New Zealand owned fire and general insurer, AMI Insurance, has posted a strong $28m Net Surplus After Taxation.

Continued growth of the company meant that value could be returned to members and further additions made to its branch network. It also added to AMI’s already strong asset base and solvency margin.

“Our new branding, introduced in July 2006, has boosted AMI’s profile and with our reputation for excellence in Customer Care and extensive branch network has resulted in significant growth in business from both new and existing customers”, says AMI Chief Executive, John Balmforth.

With more customers switching to AMI, written premiums increased by 4.3% to $262 million.

AMI’s Net Surplus for the year ended 30 June 2007 added to its already sound financial position. Total Assets of the mutually owned company increased to $439 million. This is a 6.9% increase on 2006 and represents an increase of 34.5% over three years. Equity broke through the $300 million mark. AMI’s Solvency Margin, an insurance industry accepted indicator of financial strength has now risen to 118% and is easily the highest in the New Zealand industry. As a result, AMI’s “A” (Excellent) financial strength rating from international rating agency A.M. Best Co. has been confirmed with positive outlook.

“As a mutual company owned by its policyholders, we have continued to focus on recognising and rewarding the loyalty and support of customers and returning value to members”, Mr Balmforth said. “The number of customers receiving for free our market-leading maximum No Claim Bonus protection freeBmax®, continued to increase during the year with over 230,000 customers now receiving this benefit. We also increased our multi-saver discounts and despite growing claims numbers, motor and contents premium rates were not increased, while house insurance premiums were reviewed for the first time since 2003”.

To help service the increasing demand for its services and reflecting its long-term commitment to its branch network AMI has, since 1 July 2006, opened new branches in the Hamilton suburb of Chartwell, Bayfair in Tauranga and on 1 November this year at Albany on Auckland’s North Shore.

“The ability to talk to our staff face-to-face through our branch network is something that our customers prize highly. AMI now has the largest company-staffed branch network in the New Zealand fire and general insurance industry,” says Mr Balmforth.

Mr Balmforth said, “The 2006/2007 year was devoid of major disasters of the scale of the South Island snow storms of 2005/06 but a number of medium-sized events caused significant damage to customers’ property. Nelson experienced floods in May and Northland succumbed to serious flooding in March this year, and again in July, just after balance date. July was also a challenging month with tornados in Taranaki and frosts in the South Island”.

These types of events throughout the year led to an increase in claim numbers of 9.6% to 187,222 but AMI’s Loss Ratio increased only marginally from 63.67% to 64.19%. As a result AMI’s underwriting surplus reduced from $17 million to $15 million. Investment markets were at a lower level than last year, which reduced investment income by $2.3 million to $26.7 million.

AMI’s management expense ratio dropped from 26.89% in 2006 to 26.43% in the current year and remains one of the lowest in the New Zealand fire and general insurance industry.

“This excellent financial result will give customers even greater confidence that their insurance company is in a strong and sound financial position. It also means we have a sound base from which we can provide further benefits to our members,” says Mr Balmforth. “The result is also a strong endorsement of the outstanding Customer Care provided by our staff”.

In April 2007, AMI launched CLIC Car Insurance Limited (CLIC) - the “Car Lovers Insurance Company” as an innovative new brand of car insurance. Operating completely separately from AMI, CLIC has been established to assist people who have experienced difficulty arranging car insurance and is wholly-owned and underwritten by AMI. Customer response to CLIC has been excellent.

“AMI has shown an ability to grow in changing and competitive markets and with our continued focus on Customer Care and further enhancement of our programme to recognise and reward the loyalty of our members we are confident that will continue”, says Mr Balmforth.

AMI FIVE YEAR SUMMARY ($ millions)
2003 2004 2005 2006 2007
NZIFRS adjusted NZIFRS adjusted NZIFRS adjusted NZIFRS adjusted NZIFRS adjusted
Written Premiums $ 204.4 229.3 243.4 251.3 262.0
Net Surplus after Tax $ 17.5 25.4 30.1 30.6 28.2
Cost of Claims $ 132.2 142.6 151.7 160.0 168.2
Total Assets $ 286.0 325.2 370.7 410.2 438.6
Solvency Margin % 84.1 86.9 96.0 108.7 117.9

Note: This year our accounts have been prepared on the basis of the New Zealand International Financial Reporting Standards and the five year comparable figures have been adjusted accordingly.

ENDS

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