Insurer may favour cashMARTA STEEMAN Last updated 11:56 29/03/2012
That was indicated in a report by international ratings agency A M Best on ACS Ltd, formerly Ansvar New Zealand.
ACS stopped insuring in New Zealand at the end of last year after clocking up $700m of claims from Canterbury's quakes.
ACS is now focused on settling claims.
While it is known as an insurer of churches and heritage and community buildings, it also has about 1138 household customers and 230 commercial customers in Canterbury.
In New Zealand it has 7646 customers with household policies and 2100 commercial customers, according to company information provided late last year.
The ratings agency said ACS had arrangements with reinsurers to speed up cashflow and there were "efforts by its parental management to seek cash settlement of claims".
A M Best viewed that as positive because it was concerned that ACS would eat into its own capital if reinsurance money did not flow through fast enough. It noted its parent had provided some short-term cashflow.
Ansvar New Zealand changed its name to ACS on February 1 because the business had changed and stopped writing insurance.
A M Best downgraded the creditworthiness of ACS to B+ (good) this week. The rating indicates the ability of a company to meet its payment obligations.
ACS's new rating is much lower than its A- , "excellent", of 18 months ago.
The Press asked parent Ansvar Insurance (Ansvar Australia) if ACS was promoting cash settlements rather than property reinstatement.
Ansvar replied in a statement: "We have an open approach to settling claims. The process is to work through options that work for claimants and are consistent with their policies. At the end of the day, this will be a mix of cash settlement and property reinstatement across our book."
The Press asked if the $700m had increased as the company worked through the claims.
ACS said the $700m of claims was its latest stated figure and had not been updated.
Ansvar Insurance is owned by Ecclesiastical Insurance Office in Britain.
At the same time as the New Zealand company was downgraded, Ansvar Insurance's rating was confirmed at A-.
Asked about the amount of ACS's reinsurance cover and if Ansvar Insurance and Ecclesiastical Insurance Office would underwrite ACS, Ansvar said: "ACS is comfortable with the level of reinsurance it has. ACS is firmly focused on settling outstanding claims as quickly as possible and is making good progress in this."
- © Fairfax NZ News
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April 05, 2012, 10:04:30 PM