Vote of confidence in rural sector

MEDIA RELEASE – for immediate release

23 August 2005

Vote of confidence in rural sector

Leading rural insurance and finance company FMG has revealed plans to expand its activities within the rural sector.

FMG, which holds its centenary annual meeting in Dunedin on Thursday, is the country’s largest general insurer to the rural sector, with a 36 percent market share.

However, Chief Executive Gordon Smith says FMG’s traditional customer base has primarily been farmers and the Group has ambitious plans to focus on servicing the wider rural economy.

“Provincial New Zealand is not sufficiently understood by general insurers, including the larger banks. We’ve been focusing on the rural sector for 100 years and we feel the time is right for us to make this expertise work for a much wider base,” said Mr Smith.

He said FMG’s nationwide team of Client Business Managers and assessors will be boosted with the appointment of seven new Commercial Managers and four new Area Sales Managers.

“Our rural economy extends far beyond the farm gate. It also includes suppliers and related support services and industries. We believe our specialisation, together with market expansion to serve those who live and work on the land, or service those who do, is the key to our continued success.

“We know the rural sector well. FMG Client Business Managers work exclusively within the sector and our call centre staff understand the sector inside out. Compare that to the larger general insurance companies – it’s unlikely a person sitting in one of their call centres has ever been near a farm,” Mr Smith said.

FMG will expand its services to provide rural, commercial, domestic and life insurance, finance and investment advice to farmers and businesses in rural areas and provincial towns across New Zealand.

“Product knowledge for rural communities is our strength, so finding complementary niche products to service the market provides many opportunities to continue growing. For example, we recently launched a new forestry insurance product that has already been accepted as a market leader,” said Mr Smith.

FMG prides itself on its rapid response to crises affecting the rural sector, such as the lower North Island floods in 2004.

“An insurer is often judged on their ability at claim time and this is why we aim to be fast, fair, consistent and efficient to enable people to get on with their lives,” Mr Smith said.

He cited another example of a major pack house fire suffered by an FMG client in Hawke’s Bay in March 2005.

“Within a week of the fire FMG paid out $1m to enable our client to start recovering from a total loss. The entire claim was settled in May just weeks after the fire.”

Mr Smith said key financial highlights for the 2004/05 year included:

- General insurance premium income growth of 12%

- Total asset growth of 9.7%

- Increase in equity (reserves) of 22%

- Profit before tax of $20m

- Dealt with 31,140 claims in New Zealand totaling $52m, resulting in a loss ratio of 60%

- Strongly maintaining an A- (Excellent) rating from international rating agency A M Best Company

ENDS

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