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Insurance Liability Valuation 31 December 2018

EQC commissioned Melville Jessup Weaver to carry out this report, which provides information about EQC’s insurance liabilities and reinsurance recoveries for use in the financial reports as at 31 December 2018 and the development of EQC’s Canterbury and Kaikōura earthquakes claim costs since 30 June 2018.

EQC is providing this report to the public in the interests of transparency and has considered the public interest in deciding whether to withhold any of the information contained in the report. EQC has decided it is necessary to withhold the following information under the Official Information Act 1982:

  • names of certain individuals under section 9(2)(a) to protect privacy;
  • information under section 9(2)(h) to maintain legal privilege;
  • information under section 9(2)(j) to carry on, without prejudice or disadvantage, negotiations.

At a gross level, the estimated ultimate costs (undiscounted) from the Canterbury earthquake sequence have risen to $11,173m, an increase of $129m since the June 2018 ILVR.  The main drivers of the increase in gross estimated costs include:

  • continued experience of claims being reopened; and
  • an estimated increase in Canterbury claims handling expenses (CHE) of $30m, primarily relating to a greater understanding of the costs now expected to be incurred post June 2020.

The Kaikōura ultimate liability (undiscounted) has increased to $631m, an increase of $15m since June 2018. The increase is primarily due to higher than expected settlements for multi-unit buildings and insurer-managed building claims, and an increase in CHE.