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This overview provides details of significant expenditure and revenue variances between actual results in 2009/10 and 2010/11 and between 2010/11 actual results and 2010/11 Supplementary Estimates.

Asian Development Bank - Increase in Capital

The 5th General Capital Increase was paid to the Asian Development Bank in 2010/11 (page 98). The payment was $65.125 million compared to the forecast of $71 million owing to changes in exchange rates and a discount offered.

AMI Insurance Limited (AMI)

On 7 April 2011 the Government provided a financial support package for AMI to give policyholders certainty and to ensure an orderly rebuild of Christchurch after the earthquakes.

The Government has entered into a five-year arrangement to subscribe for $500 million in convertible called, but unpaid preference shares in AMI. On the fifth anniversary of the agreement date (7 April 2016) the Government committed to make the payment of $500 million if the amount is not paid earlier or if AMI has not terminated the arrangement by that date.

Payment of up to $500 million for the convertible preference shares may happen at any time prior to the fifth anniversary, either on request from the company or at the option of the Crown. The Crown can require paid-up preference shares to be converted to ordinary shares if a "trigger event" occurs, or if the Crown decides that it is necessary or expedient in the public interest to convert the shares. The Crown obtains the power to determine the board of directors either if a "trigger event" occurs, or if a payment is made on the convertible preference shares. "Trigger events" include non-compliance with the Crown support arrangement, an insolvency event and a material adverse event.

For the purposes of financial reporting, AMI has been consolidated into the Financial Statements of the Government on the basis that the Government has the capacity to direct the operating and governing policies of AMI (through its option to make a partial payment and take control of the Board) and is directly impacted by the risks, or benefits from, AMI's operations.

The fair value of AMI on acquisition was $159 million. This estimate makes use of a valuation of the AMI business performed by Deutsche Bank Limited and completed in August 2011, and also takes into account the costs associated with the Canterbury earthquakes.

Summary of AMI Disclosures in the Supplementary Schedules - Non-departmental
Summary of AMI Disclosures in the Supplementary Schedules - Non-departmental 2011
Main Estimates
Supp. Estimates
- Statement of Expenditure and Appropriations - Impairment of Crown's interest in AMI (page 97) 335,000 - 427,400
- Schedule of Expenses - AMI discounted payable (page 96) 2,000 - -
- Statement of Expenditure and Appropriations - AMI Equity Injection (page 98) 500,000 - 500,000
  Statement of Revenue - Other Fees (page 100) 15,000 - 15,000
- Schedule of Liabilities - Payable AMI (page 102) 496,000 - 427,400

As the Crown's support package of $500 million is not expected to be paid immediately, a discount is made to adjust for the time value of money.

A commitment fee of $15 million was paid to the Crown by AMI for this facility.

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