NZ less attractive says global insurance chief

By RICHARD BRADDELL

WELLINGTON - The change of government and policies such as the renationalisation of workers' compensation have made New Zealand a less attractive place to invest in, says Royal & SunAlliance's global chief executive, Bob Mendelsohn.

On his second pastoral visit, London-based Mr Mendelsohn said some of the policies and positions taken by the new Government looked like ones that had failed elsewhere.

In recent years, the group has pumped money into New Zealand for acquisitions of life, general and investment operations that have taken it to number two in insurance and three in funds management.

But while Royal & SunAlliance, as underwriter to the Fusion alliance, was the most successful insurer in the privatised workers' compensation market, that position from July 1 will count for little.

Mr Mendelsohn said the impact of renationalis-ation of workers' compensation was unfortunate - under ACC, New Zealand workplace safety was the worst in the industrialised world.

While actions such as the renationalisation had taken the gloss off New Zealand, Mr Mendelsohn said it still had a long way to go before joining the ranks of countries like Austria and Zimbabwe, where operations have been sold in the past year.

"New Zealand has been a terrific place to do business.

"We hope it will be in the future, but as I say we do have some concerns about some of the things the new Government is doing on free trade, on tax, on workers' compensation," he said.

International credit rating agency Standard & Poor's has said New Zealand's insurance market is at a dead end with limited growth prospects further dampened by the return of the ACC monopoly.

But Mr Mendelsohn and Royal & SunAlliance's local chief executive, Alan Bradley, rejected this.

New internet and e-commerce products and service delivery promised lower costs for the consumer and a whole new range of risk products, while the investment and pensions markets were growing, said Mr Mendelsohn.

Standard & Poor's singled out the commercial insurance sector specialised in by Royal & SunAlliance, as a loss maker in 1999, but Mr Bradley said: "We had an excellent year. We had high levels of profitability in all of our businesses."