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Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - February 2012 Decisions

IAG Grabs AMI In Post-Earthquake Insurance Shakeup

Another quiet month at the OIO. The most significant Decision was that in favour of IAG New Zealand Limited Insurance Australia Group Limited, Australia (100%) which received approval for the acquisition of property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100m, that property being: the acquisition of assets and liabilities by AMI Insurance (Operations) Limited, a wholly owned subsidiary of AMI Insurance Limited, from AMI Insurance Limited and CLIC Car Insurance Limited; and

• the subscription by the Applicant of shares in AMI Insurance (Operations) Limited resulting in the Applicant owning 100% of the share capital of AMI Insurance (Operations) Limited (and any subsequent transfer(s) of the shares in, and/or the assets and liabilities of, AMI Insurance (Operations) Limited to any associate within the IAG Group).
• The vendor was AMI Insurance Limited New Zealand Permanent Trustees Limited as trustee for all AMI policy holders, New Zealand (100%); consideration was $380,000,000. The OIO states: "Insurance Group Australia Limited (the parent company of the Applicant group) is an Australian incorporated entity listed on the Australian Securities Exchange. A strategic priority of Insurance Group Australia Limited is to accelerate growth in its home markets of Australia and New Zealand. The proposed transaction is consistent with this strategic priority".

Marta Steeman reported the settlement of this deal in Stuff.co.nz (5/4/12):

"Australian insurance giant IAG takes over AMI's 500,000 customers today with the settlement of its $380 million purchase of the 'good' part of the old Christchurch insurance company. However AMI customers' earthquake claims are to handled and settled by a Government-owned company, Southern Response, which has about 160 AMI staff. Southern Response is based in Christchurch and is backed by the Crown Support Deed to settle earthquake claims. AMI, a casualty of the Canterbury earthquakes, has already paid out $300 million of claims. The remaining $1.5 billion will be settled by Southern Response.

"AMI has been separated effectively into two companies. AMI customers are insured with the ''new AMI' now owned by IAG, but they will also be customers of Southern Response if they have claims for earthquake damage occurring before today's sale. Should another earthquake or catastrophe occur after today, claims for any damage from these events become the responsibility of the new AMI, owned by IAG, not the responsibility of Southern Response.

"As of today Southern Response is responsible for settling more than 11,000 claims to 6,670 Canterbury properties where damage exceeds the Earthquake Commission cap of $100,000 plus GST. It will also settle nearly 22,000 claims for damage to paths, driveways and other external structures which are not covered by EQC and about 1,500 claims including contents, loss of rent and motor vehicle. AMI customers with 'over cap' claims are entitled to choose either a cash settlement to buy another home or have their homes repaired or rebuilt in accordance with their policies.

"Southern Response is to be chaired by Ross Butler of Nelson who has experience in financial services and insurance-related companies. The new Chief Executive of Southern Response is Peter Rose who has been with AMI since May 2011. The old Board of AMI has been disbanded. Butler said it would 'take a while' to work through the complex issues around the earthquakes. They included apportionment issues with EQC, uncertainty in land zoning, and land damage in the TC3 (green-blue) zone.

"'We're going to take a collaborative approach to working with the other Government agencies and insurers so our customers can get on with their lives, and rebuild their city and region as quickly as possible', Butler said. Rose said a lot of effort had gone in to ensure AMI policyholders had 'a seamless service' in the transfer of their earthquake claims responsibilities to Southern Response. 'Customers with an AMI earthquake claim will notice very little difference and don't have to do anything differently in their claim dealings', Rose said.

"Southern Response had the same team of around 160 people who had been managing earthquake claims by AMI policyholders since September 2010, using the same processes. All that had changed was the name, and there was a new 0800 number and the company they worked for was now Government-owned, he said. Rose said when the last claim was closed, so was Southern Response. The Reserve Bank, the regulator of insurance companies, confirmed this morning it has granted the new AMI a licence to operate in New Zealand".

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Storage King Gets New South African Owner

Calculator Australia Pty Limited Nathan Kirsh, South Africa (100%) received approval for the acquisition of rights or interests in up to 100% shares of Abacus Storage Fund & Abacus Property Group "Merged Entity" which owns or controls:

• a freehold interest in 0.9 hectares of land at 980 Ferry Road, Christchurch; and
• a freehold interest in 0.6 hectares of land at the corner of Portage Road & Clark Street, New Lynn.

The vendors were Abacus Storage Fund & Abacus Property Group Australian Public 99%, New Zealand Public 0.2%, and various Public 0.8%; asset value was stated as $87,029,114. The OIO states: "Abacus Storage Fund (ASF) intends to merge with Abacus Property Group (APG). ASF operates a self storage business under the Storage King brand in Australia and New Zealand. The proposed transaction will enable ASF to review future opportunities for further investment which could include investment in New Zealand'.

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Other February Decisions

John Williams Gibbs & Charlotte Corbet Gibbs United Kingdom (100%) received approval to acquire a freehold interest in 238.9 hectares of land at Haylocks Road, Akaroa. The vendor was Onuku Heights Limited Eckhard DG Keppler, Germany (100%); consideration was $2,200,000. The Gibbs plan to reside indefinitely in New Zealand.

And finally for February, Europa Research, LLC James F Cameron, Canada (100%) received approval to acquire a freehold interest in 10.1 hectares of land at Western Lake Road, South Wairarapa. The vendors were Brian Michael Furnival Lewer, Anene Cusins-Lewer and Letizea Christine Ord New Zealand (100%); consideration was kept confidential. As with Cameron's purchases here in December 2011, the OIO states: "James F Cameron and his family intend to reside indefinitely in New Zealand. They are acquiring the land as part of a larger acquisition of land in South Wairarapa which they will use as a residence and working farm".

However unlike Cameron's previous much larger purchases, the Hollywood gloss seems to be wearing thin with locals. Again, Seamus Boyer in the Dominion Post (1/6/12): "Hollywood filmmaker James Cameron has added three more properties to his growing Kiwi empire, with the latest purchases providing a buffer from curious neighbours. Yesterday the Overseas Investment Office gave Cameron the green light to buy a total of 26 hectares in south Wairarapa, where the "Titanic" and "Avatar" director already owns more than 1,000ha of native bush and farmland.

"However, the purchases have failed to win over some locals, with one calling the buy-up an 'invasion'. The three properties, all bordering Cameron's land on Pounui Ridge, consist of a 4ha bare block of land sold by American Andrew Miller, a former director of nearby luxury resort Wharekauhau Lodge; a 9ha block of native bush sold by Jeremy Bennett and Victoria Shaw; and a 13ha developed site believed to be Pounui Homestead, a bed and breakfast and wedding venue. The prices of all three are listed as confidential.

"Ms Shaw, whose parents Bill and Annette Shaw sold Cameron their Pounui farm, said the land she sold was largely covered by native bush. 'It's a great spot. We were looking at building there at some stage but the baby has come along so we've decided it's probably the right time to sell'. The purchase would give Cameron added privacy, reducing the number of possible neighbours, she said. She had not dealt personally with him, and would not reveal the purchase price. The largest property of the three, Pounui Homestead, contains several buildings including self-contained accommodation and a replica barn. A Website describes the property as the 'ultimate retreat location', containing a stream, olive grove and orchard.

"Despite a positive response from tourism operators and the South Wairarapa Mayor, not all locals are happy with Cameron's continued buy-up. One Western Lake resident said: 'Everything's all hush-hush and secretive at the moment, it's starting to feel like you're not a local any more'. Another said local buyers were being priced out of the market. 'I think a lot of people are buzzing out about it, having the likes of him next door, but it's just putting the land out of reach of the locals, who I'm sure would love to be able to buy that sort of land'.

"In December 2011 Cameron paid about $20 million for two large rural properties, one a 250ha dairy farm, the other a much larger 817ha hillside property overlooking Lake Pounui, which he also now owns. In March 2012 he added a 10ha lifestyle block. OIO rules state that potential overseas investors have to make separate applications for each purchase. Cameron and wife Suzy Amis have said they want to raise their children, ten-year-old twins Claire and Quinn, and Elizabeth Rose, aged five, 'close to the land and with a strong work ethic'. There has been speculation that he was considering making an offer on a sheep station, Wharepapa, but the 538ha property is still on the market".

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