FMG has reported its highest-ever after-tax profit of $59.3 million for its 2020/2021 financial year, with the rural insurer’s client base and market share surging.
CEO Chris Black (pictured) said that despite various challenges, especially the COVID-19 pandemic, the company’s scorecard for 2020/2021 was “one for the books.” FMG’s client base exceeded 100,000 for the first time and rural market share grew to 52%.
“This year’s result is down to three main factors: a strong underwriting profit, a relatively benign year in terms of storms and catastrophe events, and a bounce back in equity markets,” Black said.
“Posting a healthy profit is pleasing and needs to be taken in the context of other years.”
According to Black, for the past five years, the company’s profits ranged from this year’s high to a loss of $3 million in 2017, which was attributed to the Kaikoura earthquake and multiple storms that year.
“On average our profits have been around $19 million over the last five years, which is about the level we need to support a steadily growing business such as ours,” he said.
This year’s profit will be added to FMG’s reserves, bringing it to $323 million. FMG is a mutual insurer, meaning it is owned by its members and profits are reinvested into the company to support its growth and mission to support rural and provincial New Zealand.
Some the insurer’s recent notable events include the Boxing Day hailstorm near Nelson, where it paid out around $20 million to growers and other clients, and the Canterbury flood where it has already settled nearly half of the 600 claims. FMG has received around 700 claims from the recent Westport storm.
“Our support for the sector now extends to over 100,000 people and businesses who trust FMG with their insurances, which is something we’re extremely proud of,” said Black.
According to FMG board chair Tony Cleland, rural New Zealand is facing various challenges, such as labour shortages, water plan rules, carbon emission standards, general compliance, and licence to operate requirements. These highlight the importance of strength and stability for insurers such as FMG.
“We strive to ensure the Mutual is in a position to provide farmers and growers with ongoing best-in-class advice, service and support, and the results we have achieved this year position us well,” Cleland said.
“Being the insurer for the majority of rural New Zealand allows FMG to have a stronger voice on topics relevant to farmers and growers. It also provides more scope to give back to rural New Zealand through important sponsorships such as the FMG Young Farmer of the Year Contest, initiatives like Farmstrong and more recently a partnership with Melanoma New Zealand.”