More changes tipped for insurance

By TOM CLARKE

Many of the old-name insurance companies that New Zealanders grew up with have vanished, and NZI's new chief executive, Mike Hannan, believes more changes are inevitable.

Mergers and takeovers in the insurance industry have largely been driven by the fact that some companies were too small to compete successfully in international markets, he says.

The industry is being increasingly globalised, he adds, and an example is the pending international merger of NZI's parent company, CGU Group, with the parent company of State Insurance, Norwich Union Group.

That merger is about to be considered by the two firms' shareholders and by British regulatory authorities. If it is given the go-ahead, the merger of NZI and State Insurance here will come up for consideration by our Commerce Commission.

It will, if it proceeds, create a substantial operation in this country with incredible financial strength, Mr Hannan says, because both NZI and State Insurance are market leaders. They will have the backing of the individual financial strengths of CGU and Norwich Union.

"There will still be a substantial list of competitors in the New Zealand market," he says.

"Whilst some of these competitors might be relatively small in comparison to the merged NZI/State company, they are still part of very substantial global companies and have the ability to provide very fierce competition if they wish to do so.

"There are some big European companies and some large Australian companies represented here in New Zealand, and they are very competitive organisations."

Mr Hannan says the NZI/State Insurance merger will by no means be the last for New Zealand and he predicts that some major global companies could be knocking on the doors of some of the smaller companies in this country before long.

Mr Hannan began his career with South British Insurance in New Plymouth in 1964 and has remained with the same employer, although ownership and name have changed over the years through integrations and takeovers.

He has spent the past 13 years working with the company overseas in Singapore, Hong Kong and Britain.

His most recent position was director of underwriting for CGU Group in Britain.

Mergers are nothing new to him. As well as going through the South British/NZ Insurance merger in 1981 and the formation of the New Zealand South British Group, which subsequently became NZI Corporation, he also went through the General Accident Group's purchase of NZI Corporation in 1989. He was responsible then for integrating the Far Eastern operations of General Accident with New Zealand Insurance in Singapore.

Later he was involved in the integration of Commercial Union and General Accident in Britain. This was a "massive undertaking" because it meant integrating two substantial businesses.