New Zealand’s Earthquake Commission may sell most of its NZ$1.7 billion (US$1.24 billion) international shares portfolio to meet the ballooning claim costs from the recent earthquake in Christchurch.
Phillip Jacques, the commission’s CFO, said he would be “inclined” to sell global equity assets ahead of the fund’s approximately NZ$4 billion of New Zealand government bonds to cover an expected influx of claims.
Mr. Jacques said the commission’s Natural Disaster Fund holds about NZ$300 million in cash and would be liable for the first NZ$1.5 billion in claims before the NZ$2.5 billion of reinsurance coverage kicks in.
The latest New Zealand Treasury estimates have damages from the massive 7.1 Christchurch earthquake totaling at least NZ$4 billion.
Mr. Jacques said the EQC had enough liquidity to meet immediate payouts but would sell down assets “sooner rather than later” to ensure there was enough cash to cover the expected flood of claims.
According to the EQC’s latest published report, as of June 30, 2009, the fund held about NZ$1.6 billion in global equities split between active and passive strategies.
State Street Global Advisors manages the passive portfolio of just more than NZ$645 million, while the remainder is spread among a number of managers.
In 2008, EQC awarded global equity mandates to Tweedy Browne, T. Rowe Price, Capital International and AllianceBernstein. The manager lineup has since changed, but a current listing could not be learned.
Russell advises the EQC fund.
David Chaplin writes for I&T News in Sydney.