Kia ora koutou katoa, There is no question this financial year has been a challenging one for FMG and many of our clients due to the devastation caused by two unprecedented climate-related disasters in the Auckland Anniversary Weekend floods and Cyclone Gabrielle, with 15 lives tragically lost.
In addition to the Nelson floods (another significant event in itself), that’s three events classed as ‘Catastrophes’ in insurance terms (i.e. greater than $4.5m in claims and/or more than 800 claims per event) experienced over the course of the year. Thankfully this is when our robust and comprehensive reinsurance programme kicks in. Hence, why it’s critically important we treat reinsurers’ capital with the respect it deserves to ensure ongoing relationships over the long-term.
We also experienced Aotearoa/New Zealand’s wettest winter on record and a significant increase in large losses, notably large domestic fire claims. Combined, these events have resulted in a net loss of $15.7m being posted for the FY23 financial year. You can read about our financial performance in our Annual Report.
In response, we’ve undertaken work internally to cut costs and remain committed to providing affordable insurance to regional and rural New Zealand. While being fiscally prudent, we are still ambitious and committed to our growth strategy. We ended below our planned net client numbers for the year, but still added over 4,500 clients in a tough economic environment. We continue to grow our all-important rural market share which stands at 54.6%; up 3.1% points on last year and we’ve had a strong start to our current financial year.
Much like our farming and growing clients and Members, we expect years like this from time to time. The underlying business continues to be in good health. FMG is financially secure and extremely well placed to pay claims, with $330 million in reserves and strong reinsurance support. As Aotearoa/New Zealand’s leading rural insurer, we know how important it is to get around the country to experience our clients' world; be it on your farm or orchard, supporting you at your local community initiatives, or attending national industry events like the National Field Days, Ahuwhenua Awards, the Primary Industries Summit and FMG Young Farmer of the Year. It was an honour and a privilege to be there at the Grand Final of season 55 in Timaru as Emma Poole became the first female winner in the competition’s history in what was a very tight contest. Congratulations again to Emma on her historic win.
It’s clear that the agricultural sector is facing significant headwinds with sustained high production costs, high interest rates, falling commodity prices, difficulty finding staff, regulatory pressures and severe weather impacts to name a few. Despite those significant headwinds, export revenue for the sector set a new record at $56.2 billion, meaning that 82% of the country’s exports now come from the food and fibre sector. In addition, our farmers manage over 2.8 million hectares of native vegetation and employ 1 in 7 of the workforce. So, while we acknowledge things may not be easy on our farms, orchards, and in our rural communities at present, your contribution to this country’s wellbeing and prosperity is significant. We are proud of what you do, and will continue to stand alongside you and face the headwinds together. Ultimately, the work we do is about looking after people. Our people-first culture has seen FMG ranked as one of the best places to work in the world in the Gallup Exceptional Workplace Awards for the second year running, so you can rest assured we’ve got the best people on the job.
On behalf of FMG, thank you to our clients and Members, for your ongoing support and for the trust you continue to place in us. A special mention also to our outgoing FMG Board Chair, Tony Cleland for his immeasurable contribution during his 16 years of service to FMG. Tony’s extensive experience in the rural sector has played a vital role in FMG’s growth and sustained success over that period, and while he will be sorely missed, we wish him every success for what lies ahead.
Kind regards / Ngā mihi,
Chief Executive, FMG