Country Profile New Zealand www.lloyds.com/NewZealandMI
April 2014 chris.brown@lloyds.com
KEY FACTS FULL NAME / CAPITAL CITY: New Zealand / Wellington
GDP (PPP):
US$ 134bn (Global Rank #66)
LANGUAGE:
POPULATION:
5m (Global Rank #117)
IMF CATEGORISATION:
“Developed”
English (91%), Maori (4%)
MAIN EXPORT PARTNERS:
Australia 22%, China 13%, US 9% (2011)
MAIN IMPORT PARTNERS:
China 16%, Australia 16%, US 10% (2011)
MAIN EXPORTS:
Dairy products, meat, wood and wood products
MAIN IMPORTS:
Machinery and equipment, vehicles and aircraft, petroleum 2012 Rank
2013 Rank
Change in Rank
EASE OF DOING BUSINESS:
3
3
0
COMPETITIVENESS:
25
23
2
FREEDOM FROM CORRUPTION:
1
1
0
DISASTER
YEAR
ECONOMIC COST (US$ x 1000)
Earthquake
2010
3,700,000
Earthquake
1987
210,000
Extreme Temp.
2001
200,000
Flood
2004
200,000
Drought
1994
100,000
Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum © Lloyd’s
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KEY STATISTICS GOVERNANCE INDICATORS
SIZE OF ECONOMY
WEALTH PER CAPITA
Percentile Rank (1-100) 2012
Purchasing Power Parity (PPP) basis in International $ bn
Purchasing Power Parity (PPP) basis in International $
3,000
100,000
2012
NZ
AU
SG
new zealand
australia
singapore
2,500
Government Effectiveness
96
94
100
75,000
97
100
96
97
Regulatory Quality
99
97
100
500
Rule of Law
99
95
96
0
Control of Corruption
50,000
1,500
29,481
81
26,287
97
1,000
36,608
2,000
Political Stability and Absence of Violence/Terrorism
131
110
0
2006
Voice and Accountability
98
96
54
170
25,000
NZ
2012
2006
2018f
AU
2012
NZ
SG
2018f
AU
SG
TOTAL NON-LIFE DIRECT INSURANCE MARKET*
NON-LIFE DIRECT INSURANCE MARKET
LLOYD’S GROSS SIGNED PREMIUMS
Premiums in US$ m
Premiums in US$ m; by OECD Class
Gross Signed Premiums in US$ m; by country of origin
30,000
Motor
2,500
245 117
25,000
PA & Health
274
1,081
2,000
20,000
2011
NZ
2012
AU
2013
SG
Miscellaneous
1,870
261
1,000 500
MAT
0
1,500
264
Liability
3,853
3,603
5,000
3,153
10,000
New Zealand* 2012 US$ 3.6bn
191
Property
15,000
0 2011
NZ
2012
AU
2013
SG
All data, sources & data limitations are available for download at www.lloyds.com/comparecountries; * 2013 total non-life based on CAGR projection
LLOYD’S TRADING POSITION New Zealand www.lloyds.com/crystal
Insurance: Yes Reinsurance: Yes Coverholders: Yes © Lloyd’s
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BUSINESS ENVIRONMENT National Party government is finding its second term more challenging than the first. The ruling, centre-right National Party (NP) dominated the 2011 election, but has since taken a series of knocks, including a reversal on classroom sizes, allegations of corruption and sleaze, and a bruising battle over its plans to cut public services. This has resulted in NP and Prime Minister John Key performing more poorly – although by no means badly – in the opinion polls. So far, this has not been effectively exploited by the opposition Labour Party, but this could change in the run-up to the 2014 election. Earthquake reconstruction will be a costly affair. The total repair bill for the 2010 and 2011 earthquakes in the Canterbury/Christchurch region is estimated by the Treasury at NZD40 billion (20% of GDP). However, these estimates are only for capital expenditures and exclude additional miscellaneous costs, such as insurance claims for lost businesses, claim handling costs, and the cost of temporary accommodation, which together boost the total. It is estimated that it could take up to a decade to rebuild Christchurch alone, further revealing the scale of the devastation. Economic activity will be centered on reconstruction activity in the near term. IHS Global Insight currently expects real GDP growth of 2.6% in 2013 and 2.9% in 2014, driven primarily by reconstruction work, which is in full swing. Private consumption and business investment activity are expected to pick up modestly, but both are constrained by weaknesses in the non-Canterbury domestic economy and uncertainty in the global economy. The largest near-term risks, aside from further earthquakes, center on reduced agricultural export volumes from drought conditions, a recent dairy safety scandal false-alarm, and continued weak external demand. Monetary policy still on hold as budget plan remains on track. The Reserve Bank of New Zealand (RBNZ) is expected to leave the official cash rate at 2.50% until the second half of 2014 as the bank remains cautious about the growth outlook, and is not concerned about consumer price inflation. The RBNZ will be implementing a new loan-to-value macro-prudential regulation from 1 October 2013 to contain rising house prices. The May 2013 budget indicates that the budget should return to surplus by the fiscal year (FY) ending 30 June 2015. Thankfully, stronger-than-expected tax revenues and previous budget savings have provided fiscal space to target additional spending for a small number of initiatives for FY 2013/14. .
GROSS DOMESTIC PRODUCT (GDP)
TOP-10 SECTORS (BY VALUE ADDED)
BUSINESS ENVIRONMENT INFORMATION
(nominal GDP levels in billion US$; Real GDP change)
(value added in billion US$ & 2014 Change in real %)
(provided by IHS Global Insight, April 2014)
250
4% TOP SECTORS 3.2%
200 150 100
2.9%
2.7%
2.8%
3% 2.7%
2.5%
2.6%
2%
1.8% 1.2%
50
1% 0%
0
-1% 2009 2010 2011 2012 2013 2014 2015 2016 2017
2013 Value Added
2014 Percentage Change
1. Real estate 2. Agriculture 3. Business services 4. Health and social services 5. Wholesale trade 6. Retail trade - total 7. Banking & related financial 8. Public Admin. & Defense 9. Construction 10. Education
18.2
1.9
13.4
1.9
13.2
4.3
10.6
2.3
10.1
2.3
10.1
2.5
8.9
2.6
8.7
1.8
8.5
6.1
7.5
2.4
Top-10 Total
109.2
For daily updates visit: > www.ihsglobalinsight.com © Lloyd’s
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INSURANCE ENVIRONMENT 2009 MAJOR DIRECT INSURERS
2012 DIRECT PREMIUMS
(Direct Premiums GWP in US$ m)
(Premiums in US$ m; by OECD Class)
0
200
400
600
IAG New Zealand
QUICK LINKS / USEFUL SOURCES Insurance Market Profiles > www.iii.org/international/profiles
800 757
Motor
245
Insurance Association > www.icnz.org.nz
117
Vero Insurance
507
AMI Insurance Lumley General
205
TOWER Insurance
101
Farmers' Mutual
82
Chartis
74
Allianz New Zealand Zurich New Zealand ACE Insurance
PA & Health
274
1,081
205
63
Property Liability
New Zealand* 2012 US$ 3.6bn
Lloyd’s Agency Network > www.lloyds.com/agency Lloyd’s Claims Team > www.lloyds.com/claims
MAT Miscellaneous
The Insurance Regulator > www.icnz.org.nz
1,870
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BUSINESS CULTURE GUIDE
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> http://www.kwintessential.co.uk
Source: Association; www.iii.org
Source: Association; www.icnz.org.nz
(View Resources > Culture Guide)
The earthquakes will have a profound impact on the New Zealand non-life insurance: Standard & Poor's Ratings has revised its outlook on the New Zealand non-life insurance sector to negative from stable. The ratings agency considers the sector susceptible to natural catastrophe risks, a change from their previous view. The financial profile of some non-life insurers in New Zealand is expected to deteriorate significantly in 2011. A potential decline in underwriting profits stemming from earthquake-related claims and investment earnings because of equity market-related losses is expected to contribute to the deterioration. ‘Following the earthquakes, insurers’ claims management processes have come under increased scrutiny from reinsurers seeking to contain claims costs, as whilst many insurers had structured reinsurance programs in place, claims severity exceeded initial forecasts, resulting in some upper reinsurance layers being breached for the first time in history. These catastrophic events have emphasised the importance of reinsurance, however the affordability of reinsurance going forward is an issue for the industry.’ (Source: KPMG Report, 2011)
The two largest earthquakes, (4 September 2010 and 22 February 2011), have been so severe as to lead to an estimated combined cost equivalent to c.8% of New Zealand’s GDP. © Lloyd’s
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LLOYD’S BUSINESS 2009-2013 LLOYD’S TOTAL PREMIUMS
2013 LLOYD’S HIGH LEVEL CLASSES
Gross Signed Premiums; Direct versus Reinsurance; in million US$
Gross Signed Premiums; high level classes; in million US$
2013 GROSS SIGNED PREMIUMS*
300 250 83
200 150
Total
US$ 261m
Reinsurance Direct
US$ 69m US$ 192m
69
181
40
50
192
Policyholders are based or headquartered in this territory;
Premiums may be written outside this territory;
101 60
73
2009
2010
0
Direct
2011
3.8 38.6
Property (D&F)
140.1
Marine
*COUNTRY OF ORIGIN PREMIUMS 54
0.0
Property Treaty
91
100
UK Motor Overseas Motor
2012 Reinsurance
2013 X X
Not necessarily where risks are located May differ to what is reported to local regulator (dependent on local requirements).
11.9
Energy
7.4
Casualty
33.3
Casualty Treaty
2.7
Aviation
15.7
Accident & Health
7.3
0
20
40
60
80
100
120
140
160
SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details
Office Type
A Type 2 office is defined as a Country Representative, who is either employed directly or who is a third party retained by Lloyd’s. A Type 2 Representative satisfies the minimum requirements for the licence in the territory and may also undertake additional regulatory or legislative functions. They are also responsible for the promotion of Lloyd’s and the protection of the brand within the country
Lloyd’s Country Manager
Mr Scott Galloway Lloyd's General Representative in New Zealand c/o Hazelton Law Level 3 , 101 Molesworth Street PO Box 5639 , Wellington, New Zealand Tel: +64 4 472 7582 Fax: +64 4 472 7571 Email: scott.galloway@hazelton.co.nz © Lloyd’s
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APPENDIX MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight. Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $ terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates. INSURANCE MARKET DATA Source: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers. Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries. Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com. LLOYD’S PREMIUM DATA Source: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging). Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on a calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor). Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging. Definitions: Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums. Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of account, which is determined by the inception date of each risk. Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes. Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by “Country Of Origin”, but “French” for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 “Underwriting Year of Account” but may not be processed by Xchanging until 2008 and so be allocated to the 2008 “processing year”. ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.
DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document. © Lloyd’s
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