AM I uninsured?
So the AIG of NZ - the too big to fail AMI insurance - is going to be underwritten by the Crown as the reinsurer of last resort.
AMI seriously doubts it has enough insurance cover itself. They say:
Time will tell whether these will be sufficient
That means they are not sufficient, or else they wouldn't have approached the Treasury with their pockets turned inside out looking like Alan Hubbard's long lost son.
Bill English tells us it is a capital restructure... everyone else calls it a bail out.
The NZ Herald notes the dominant (or should that be weak) position in Christchurch. The Finance Minister in parliament today said it was a "unique" event brought about by Christchurch's double quake. If only it was as simple as that he may have been believed.
The bail-out by the government of large private firms who have mismanaged risk is now routine. The government intervenes to use the Crown coffers to pay out their mates and their primary constituents under the guise of preventing systemic market failure and dresses it up in nationalist bunting. South Canterbury Finance may have been the high water mark (with a projected net loss to the Crown running towards a billion or more) but AMI is also in the league of Kiwi Rail, Air NZ, the BNZ collapse and government bailout of the 1880s and the deja vu collapse and bail-out a hundred years later. These series of buy-ins and pay-outs and restructurings do little more than encourage poor local management to make poor decisions. It enables smart foreign management and investors to make a killing at the expense of the government/taxpayers.