A new lead investor or owner for beleaguered New Zealand insurer AMI will be revealed within weeks.

AMI Insurance, which holds about one-third of the house and content policies in quake-devastated Christchurch, has confirmed an “expressions of interest” campaign is under way.

Pundits say the interested parties include New Zealand Stock Exchange-listed Tower, Wesfarmers Insurance and IAG. However, insuranceNEWS.com.au is aware that several large insurers have already rejected approaches from Goldman Sachs, which is managing the campaign.

“The difficulty with AMI is that it has a disproportionate exposure to some very toxic business,” one industry source said. “If you followed AIG’s lead from 2008 and ring-fenced that business from a new operation, what would you actually be investing in?”

AMI spokesman Mark Hamer says the process will be relatively quick. “In terms of the next step, it will be a matter of weeks rather than months.

“Goldman Sachs has sent out an information memorandum to selected parties and we are waiting for a response,” he told insuranceNEWS.com.au.

Last month AMI reported a $NZ705 million ($561 million) loss for 2010/11 as claims from the earthquake shredded its bottom line.

Critics have argued that AMI failed to purchase enough reinsurance to adequately cover potential claims and was over-exposed to risks in Christchurch, where it is based.

The insurer is a mutual, owned through a trust structure by its 500,000 policyholders.

The New Zealand Government agreed earlier this year to make a $NZ500 million ($394 million) lifeline available to AMI.

While the money has not yet been drawn down, the deed which governs the agreement requires AMI to have a minimum capital level of $NZ198.6 million ($156.5 million). AMI’s recent financial statement indicates it is $NZ76 million ($60.1 million) short of that figure.

The recapitalisation of the company through investment or part-purchase is intended to help fix the shortfall.

AMI says the cost of the earthquake claims – over and above the levels of reinsurance – is expected to reach $NZ531 million ($419.82 million).

It has set aside $NZ760 million ($601 million) to pay earthquake claims as they are settled over the next few years, and has already paid out $NZ80 million ($63.24 million).