The mutual group’s just released annual report and financial statements show a profit after tax of $6.1m, down from just under $19.1m a year before, which will take the company’s reserves to $263.5m.
That comes on that back of a record number of claims received and dealt with during the 2019-20 year.
Black says profit was on track to match last year until a severe equity market correction in March.
He says market corrections happen from time to time and he expects to get some of that money back this financial year, while investment markets have rebounded strongly from the initial hit they took as a result of covid-19.
The 201 million claims FMG received for the year was up from 176m the year before, which Black says is due to both ongoing growth in the company’s business and the storm that hit the south of the South Island in February.
Two-thirds of the claims FMG receives are vehicle claims and a record number of those were settled.
Net client growth for the year was 7%, bringing overall client numbers to 94,300 and rural market share to 51%.
Black sees no reason why that market share cannot grow to 70% in the next 10 years.
He is happy with the level of profit, saying the mutual insurance model aims to align the interests of owners and clients.
“It’s a model which, while set up to make a profit, does not seek to maximise profit. It’s based on an enduring core purpose of ‘giving rural New Zealand a better deal’,” he said.
“Making a profit allows us to invest in new products and services, such as the recent launch of the online service channel FMG Connect.
“It also means we’re able to support important initiatives such as rural sponsorship, community events and the rural wellbeing programme, Farmstrong.”
FMG Connect, initially released to clients with domestic products like house, contents and car insurance, has been well-received, he says, with around 5000 people signed up. It will be available to all FMG clients by the end of the month.
Black says FMG has an emphasis on providing advice to help farmers get in front of potential problems before they occur, to help them avoid losses, as the real cost of claims to those making them is often not the direct financial cost but the cost of resulting interruptions.
He rejects concerns over the level of the company’s reinsurance cover raised by Bevan Killick, who is standing for a position on the FMG board.
Black says FMG is one of the most solvent insurance companies in NZ, with excess reserves to Reserve Bank requirements and it buys to one-to-1000-year events in reinsurance.
There are 10 candidates standing for three positions on the board, which is due to be elected at FMG’s annual shareholder meeting in Tauranga later this month.
