Troubled New Zealand mutual AMI Insurance denies it’s in buyout talks with opposition insurers, pouring cold water on media speculation that names Suncorp, Tower, and IAG as prospective bidders.

Chairman Kerry Nolan says the company is working on strengthening its balance sheet and has taken the first steps in its reinsurance renewal, confirming a new package deal.

“The company is not involved in any discussions with other insurance companies about the possibility of investing in AMI,” he said.

AMI is New Zealand’s second-largest personal lines insurer. It was propped up in April by a $NZ500 million ($386.2 million) government bailout package after crippling claims from the Christchurch earthquakes blew its reserves and reinsurance.

Mr Nolan says AMI has a number of options to bring in more capital and that the support of the Government allows the insurer to apply a measured approach to this process.

“Until we have been able to assess all claims relating to the February earthquake, the full extent of our liabilities, and how much of our own reserves will be needed to help meet these claims, cannot be calculated,” he said.

“Nevertheless we have already established a taskforce and appointed Goldman Sachs to examine our future capital needs and options.”

Mr Nolan says although AMI has the option of falling back on the Government to provide more capital if necessary, the insurer is confident it will secure the capital it needs.

Its new reinsurance package which came into effect on Friday includes double the previous catastrophe program. It allows for up to $NZ1.3 billion ($999 million) per event in the year beginning June 30 2012, compared to the previous $NZ600 million ($461 million) limit.

“The new package we have now finalised is obviously more expensive, because of the higher level of catastrophe cover, and because reinsurance rates have increased,” CEO John Balmforth said.

“Paying more for this enhanced level of protection is inevitable, and is a major factor in premium increases for AMI policyholders as they fall due…

“Everyone is having to pay more for insurance – that is just the new reality.”