Marshall claims N.Z. risk management first

Press, 4 August 1987, Page 41

Marshall claims N.Z. risk management first

Marshall Financial Group, Ltd, (MFG) has formed a risk management company, considered the first of its kind in the country. The formation of the group itself was announced at a press conference yesterday, consisting of: • Marshall Risk Management, Ltd. • Marshall Corporate Finance, Ltd. • Marshall Futures, Ltd. • Marshall Equities, Ltd. The joint managing director of MFG, Mr Grant Marshall, said yesterday that the concept of a risk management company, involving insurance, had not been tried in New Zealand before. Such a risk management business had been started in one overseas country in an economy similar to New Zealand’s, he said. But he was not prepared to name the country. The firm had managed to secure a second person for the risk management company, in Auckland, from that country. The person would be dealing with probability analysis. Marshall Risk Management will be involved in the risks that are normally considered insurable. It will use risk management techniques developed overseas to identify and evaluate risk. A report, accompanying the release on the formation of MFG, said that the risk was eliminated or reduced by a variety of loss control methods, after which the remaining risk exposure was financed through sophisticated selfinsurance funds protected by catastrophe re-insur-ance. Mr Marshall said that

the links with AMP Fire and General had enabled the company to produce such a service.

One advantage of such risk management was that for fire, general, and marine insurance premium costs could be cut by 30 per cent. In the case of the catastrophe insurance, the reinsurance business was being done through London, Mr Marshall said.

Mr Peter Marshall, the other joint managing director, said that MFG was an umbrella company, formed so that the services of the four companies could be marketed together rather than separately. Another factor was that all four companies would be able to share resources and give a variety of services to clients.

One of the main planks of MFG, and its four subsidiary companies, was that it was independent — it was not involved in the physical markets. "We have seen a lot of conflict of Interest in the markets this year.” Mr Grant Marshall said that MFG was the only firm in the country involved in foreign exchange risk management that was not running a physical book as well. This meant that the potential for a conflict of interest was not there.

MFG is the result of a firm set up by Mr Fred Marshall, the grandfather of the Marshall brothers, in 1933. F. Marshall and Company began trading as a wool-buying broker, in 1933, and the firm became known as John Marshall and Company, Ltd, in 1957, still involved in wool.

However, the wool broking side was severed from the firm earlier this year when John Marshall and Company was sold to Wrightson Dalgety. Mr Peter Marshall and a few individuals maintain a token shareholding in John Marshall. Mr Peter Marshall devotes some time, under contract, to Wrightson Dalgety in maintaining contacts with overseas clients.

MFG is a private, unlisted company, and both managing directors said that there were no plans to seek a place on the Stock Exchange boards at this stage. The company was planning to expand to Wellington, where there was a large client base, and it was also considering a move to Sydney and Hong Kong.

Mr Peter Marshall said that it was uncertain whether the company would go overseas on its own, or go through an existing company already

overseas. It was too early for such a decision. The AMP Society has a 40 per cent stake in Marshall Futures and a 20 per cent holding in Marshall Corporate Finance, but Mr Peter Marshall said that the society “would be what I call a passive shareholder.” The society held no shares in MFG. Marshall Equities was recently formed from the Christchurch sharebroking firm, Harkness and Company, and the staff has been increased to 7. Marshall Corporate Finance is one of the largest corporate foreign exchange traders in New Zealand, handling a currency turnover of more than SNZI billion a month.

It also has an asset and liability exposure of more than $1 billion, managed for a client base now exceeding 200. The company also manages substantial cashflows resulting from imports and exports.