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Establishment and Monitoring of Crown Investment in AMI

Scope of Appropriation

This output expense is limited to the negotiation and establishment of the Crown's investment in AMI and the ongoing monitoring of that investment.

Significant Work Completed During 2010/11

Following the 22 February 2011 Canterbury earthquake, AMI approached the Crown seeking financial support as a result of concerns that AMI's capital reserves and reinsurance would not be sufficient to meet potential claims. On 7 April 2011, the Crown entered into a five-year arrangement to subscribe for $500 million in called but unpaid convertible preference shares in AMI.

  • Negotiation and implementation of the financial support package for AMI.
  • Appointment of a director to AMI's Board.
  • Establishment and ongoing monitoring of claims processing.
  • Management of the Crown's interest in AMI through attendance at executive management meetings, Board meetings and regular engagement with the company and its advisors.
Statement of Service Performance for Output Class - Establishment and Monitoring of Crown Investment in AMI
Performance Dimensions for 2010/11 Target Performance for 2010/11
None N/A N/A
Cost - Establishment and Monitoring of Crown Investment in AMI
2010
Actual
$000
Establishment and Monitoring of Crown Investment in AMI 2011
Actual
$000
2011
Main Estimates
$000
2011
Supp. Estimates
$000
- Expenses 322 - 1,650
 

Funded by:

     
- Revenue Crown 21 - 1,650
- Other revenue 301 - -

In April, Cabinet approved funding of $1.650 million for the Treasury's costs associated with AMI. This was under-spent owing to the time lag in recruiting staff, some costs being borne directly by AMI and cheaper inspection costs. The support agreement with AMI allowed for the majority of establishment costs incurred by the Treasury to be recharged to AMI, the recovery of which has been recognised as revenue.

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