U.S. connection for Nat. Insurance

Press, 26 November 1981, Page 20

U.S. connection for Nat. Insurance

PA Dunedin The National Insurance Company of New Zealand, Ltd, yesterday announced an association with a major United States company, Fireman’s Fund Insurance of San Francisco.

The American Company has a subsidiary called San Francisco Reinsurance Company, and National Insurance’s directors said they had allotted 858,775 ordinary shares to Fireman’s Fund in exchange for an 8 per cent holding in Reinsurance. National’s share price was 295 c yesterday, and the issued shares are valued at 425 c in this instance. National’s shareholders will also be asked at next month’s annual meeting to authorise the issue of up to 750,000 shares to Fireman’s Fund for 400 c each. This would give the American company 10 per cent of National’s issued capital.

Fireman's Fund is a wholly-owned member of the American Express group, and is the tenth largest pro-perty-liability insurance company in the United States. Its assets total $5846 million. Its profit of $2lO million last year contributed 55 per cent of American Express’s total earnings. Although National is one of the top 10 non-life companies in Australia, its group assets of SISOM at last balance date are only a fraction of Firemen’s. Although a giant by New Zealand standards, Firemen's did not — until this deal — work outside North America and expansion into the Paci-

fic basin posed problems. It looked at Australia but realised that in the cutthroat competition that prevails, it was not worth while to start from scratch. Other Australian companies also posed problems, because they were either connected with British parents or have little involvement in the Pacific. National has interests in New Zealand, Fiji and other Pacific Islands, and Singapore. It is the biggest company in Papua-New Guinea. For National, the deal means more opportunities in the reinsurance business, the best form of diversification while remaining in the insurance field.