Civic Assurance boss: 'Everything will be fine'
Questions from reinsurers that have prompted a possible downgrade warning "just a precautionary thing".
BUSINESSDESK: Questions from reinsurers that have prompted a possible downgrade warning for local government-owned Civic Assurance are "just a precautionary thing", chief executive Tim Sole says.
Global insurance credit rating agency A.M. Best yesterday issued a statement saying Civic's B++ (good) credit rating was under review, with negative outlook possible because of the potential for dispute with its reinsurers, who were heavily hit by damage to local government infrastructure caused by the Canterbury earthquakes.
Speaking from France, Mr Sole told BusinessDesk that while the reinsurers had not yet given detailed questions, it was normal for them to check Civic's level of cover and to ensure payments to local authorities were correct.
"They know Civic is owned by local authorities," he said. "They want to be sure we're not over-paying. It's just a precautionary thing. I think everything's going to be fine."
Civic had uncapped catastrophe insurance with global reinsurers, leading to total reinsurance recoveries receivable at December 31 last year totalling $702.7 million, of which $626.8 million was incurred in 2011. At balance date, reinsurance payments received had totalled $4.5 million.
Civic's 2011 annual report says “all claims have been assessed by loss adjusters who have expertise in this area. We understand that there is no reason to believe that there is any systemic under or over estimation of reported claims”.
Civic lost all its reinsurance cover after the biggest 2011 quakes, and wasn’t immediately able to obtain new reinsurance arrangements, and hoped by now to have its credit rating restored to at least A- (excellent).
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Civic Assurance boss: 'Everything will be fine'
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