The New Zealand Treasury has put a fair value of $NZ159 million ($124 million) on AMI Insurance, which had to seek a government rescue package in April due to claims from the Canterbury earthquakes.

The Government offered the Christchurch-based mutual $NZ500 million ($389 million) over five years and can take ownership of the company if certain events are triggered. Although a fall in AMI’s solvency capital has triggered an event, the Government has not moved because the insurer is being offered for sale.

Treasury has consolidated AMI into the government financial statements for the year to June 30 on the basis that the crown has the capacity to direct the operating and governing policies of the mutual, and is impacted by the risks or benefits from its operations. This in effect treats AMI for reporting purposes as a business the Government has acquired.

The statements show that before the support package, AMI had total assets of $NZ1.7 billion ($1.3 billion), but has total liabilities of $NZ2.06 billion ($1.6 billion), giving a deficit of $NZ335 million ($260 million).

Treasury treats the deficit as a loss the Government has acquired, and the figure is included in total government costs of $NZ9.087 billion ($7.07 billion) relating to the earthquakes for the year to June 30.

Treasury calculates AMI had total assets of $NZ2.2 billion ($1.7 billion) after the rescue package was negotiated. The figure includes reinsurance and the $NZ500 million support.

When outstanding claims of $NZ1.9 billion ($1.48 billion) and other liabilities are subtracted, the net value of AMI “on acquisition” is $NZ159 million.

Treasury allows for no goodwill and says the estimate uses a valuation of the mutual by Deutsche Bank in August.

The statements include AMI revenue of $NZ157 million ($122 million) and expenses of $NZ177 million ($137 million), giving a loss of $NZ20 million ($15.6) to the Crown following the rescue package in April.

AMI last month reported a $NZ705 million ($548 million) loss for the year to June 30.