Friday, March 29, 2024

FMG grows in complexity and clients

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FMG made a net profit of $6.1 million in the 2020 financial year and added 6000 clients to its books, the total now numbering 94,300.
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Chair Tony Cleland, who sought re-election as a director this year in a crowded field of candidates, said the growth rate was twice that of other insurers.

“While we are not trying to be the biggest, but the best, growth in numbers does lower the unit cost of delivery per client,” he told the mutual group’s online annual meeting.

FMG’s goal is to bring the operating cost from 31% to 25% of premiums over the next 10 years.

In 2020, total premiums were $366m, up from $324m the previous year.

Its reserves have risen to $263m, which it claims places the rural insurer among the best capitalised insurers in New Zealand.

Chief executive Chris Black said FMG’s rural market share was 51%, up from 35% a decade ago, and the aspiration was to increase that to 70% by 2030.

Although FMG had few cancellations it could foresee a slower rate of growth ahead.

It had 6% of the general insurance market and strong shares of lifestyle, commercial and residential business in provincial NZ.

Chief financial officer David Kibblewhite said there were three storm events during the financial year with $7.7m of claims. Total claims paid during the year were just over $200m.

Catastrophe reinsurance cover was now close to $1 billion and that cover was called upon after the Christchurch (2011) and Kaikoura (2017) earthquakes, for example.

In those financial years FMG did not make a profit.

“As a mutual group we add the profits to reserves because we are a profit-making company, not profit maximising,” he said.

Black also reported on the greater number of interactions with clients by its call centre, usually for adjustments in policies.

He said the product portfolio was becoming more complex.

For example, from 2013 onwards coverage was extended from tractor and house fires to irrigators, to quad bike accidents, to rollovers, to health and safety matters, statutory liability, cyber security, management liability and biosecurity events.

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