Ansvar settles 19 larger claims
Insurer of churches and historic buildings Ansvar has settled 19 of its 25 larger claims in Canterbury since June, and paid nearly $400 million in full and final settlements.
That amounts to about 76 per cent of total claims lodged with the insurer.
Anglican Diocese of Christchurch chief operations officer Gavin Holley told The Press that Church Property Trustees had kept a close eye on Ansvar's solvency position in deciding how best to progress the diocese's 150-plus quake-related claims, including its claim for the damaged Christ Church Cathedral.
Holley said the trustees had received enough comfort from a "very close watching brief" on Ansvar's solvency to opt for a claim-by-claim settlement process rather than a possibly discounted global settlement.
Ansvar was inundated with earthquake-related claims after last February's Canterbury earthquake, prompting it to withdraw from the New Zealand insurance market at the end of last year, leaving policyholders wondering if their claims would be met.
Ansvar changed its name to ACS (NZ) Ltd as it is now settling existing claims and no longer offering new insurance.
In June a scheme proposed by ACS directors to manage a pro-rata system of payment of claims if the insurer becomes insolvent was sanctioned by the High Court.
At the time the Reserve Bank raised concerns over ACS's ongoing solvency, saying there was a risk that claimants who settled early would be best served, while those at the back of the queue could risk a reduced or no payout.
ACS has maintained it will be able to settle all claims in full.
ACS chief executive Andrew Moon told The Press that the insurer was operating comfortably within the Reserve Bank's solvency requirements and would continue to resolve outstanding claims as quickly as possible. ACS had paid more than 48 per cent of residential claims and settled nearly 500 claims (52 per cent).
Holley said the Church Property Trustees had opted for a claim-by-claim settlement process rather than a global settlement.
Some other claimants may have found it easier to negotiate a global settlement with ACS, he said. "And my understanding was those parties settled on the basis of a discount on their claim.
"That's not the approach we took."
Church Property Trustees had kept "quite a strong watching brief" on ACS's solvency even before last December, he said.
"[We] have had enough comfort to take this approach that we have, which was to not feel that we have to discount our claims with ACS in that we are seeking to have our policy entitlements met."
In dollar terms that has translated to about a 65 per cent completion of its claims with ACS, the bulk of that relating to a nearly complete $38m settlement for the Christ Church Cathedral.
Asked if the trustees had felt pressure to settle early from fear of missing out, were ACS to run out of money, Holley said they had "certainly felt the pressure".
"But I guess there's the issue of the financial loss from a discount versus potential financial loss from potential insolvency. And we had to weigh those up."
The trustees decided, with support from the standing committee, to continue to try to achieve full settlement. They had sought to settle the cathedral claim as a priority and ACS had been "supportive" and did what it could to progress that claim.
"It was prudent for the trustees to seek to settle the largest claim as soon as possible because that then reduced the financial risk exposure of the Diocese."
BY THE NUMBERS
In June, Ansvar claimants estimated their claims at $934.6 million. ACS said then it had a total reserve for claims of $445.8m. An independent report gave a "best estimate" that ACS had claims of $574m.
It said the ultimate cost of claims was "highly uncertain".
This week ACS says it has paid nearly $400m in full and final settlement of claims.
That represented 76 per cent of total claims lodged with the insurer.