Part 5: Canterbury earthquakes and insurance recoveries

5.1
In this Part, we discuss:

• common insurance arrangements for local government;
• how the Canterbury earthquakes have affected New Zealand Local Government Insurance Corporation Limited, trading as Civic Assurance (Civic Assurance);
• how the earthquakes have affected the Local Authority Protection Programme Disaster Fund (LAPP); and
• the uncertainty about the amount of insurance recoveries payable to Christchurch City Council.

5.2
Insurance recoveries are just one part of the funding mix required to rebuild Christchurch and the surrounding region. Overall, there has been uncertainty about the amount of insurance recoveries arising from the Canterbury earthquakes. The uncertainty comes from several factors, including longer than normal claims development periods and the extent of damage.

5.3
Progress has been made towards settling the amounts paid or payable by the main local government insurers towards the costs of rebuilding and replacing buildings and infrastructure in Christchurch. There are two disputes with reinsurers that have affected progress, and the risk of these matters remaining unresolved falls on the insured – Christchurch City Council.

5.4
The amount of the final insurance contribution to the rebuild is still unknown and will take some time to resolve.

Background

5.5
The Canterbury earthquakes highlighted the importance of good risk management for public assets, and the part insurance plays in that. Insurance costs became one of the most significant cost pressures for many public entities after the earthquakes.

5.6
In 2012, to find out more about the extent of changes in insurance costs after the Canterbury earthquakes, we asked our auditors for information about post-earthquake insurance arrangements and costs for larger public entities.

5.7
We published the results of our work in June 2013.¹⁰ That report summarised information about how more than 400 of the largest public entities insure their public assets and the main changes since 2010 after the Canterbury earthquakes.

5.8
The report included our analysis of insurance for local government assets, and gave some information about the most commonly used insurance providers in local government – Civic Assurance and LAPP – and the effects of the Canterbury earthquakes on them.

5.9
Since our June 2013 report, the three entities most affected have completed their latest annual reports:

• Civic Assurance, for the year ended 31 December 2013;
• LAPP, for the year ended 30 June 2013; and
• Christchurch City Council, for the year ended 30 June 2013.

5.10
We have used the annual reports to provide information in this Part about the ongoing effects of the Canterbury earthquakes on those three entities.

Common insurance arrangements for local government

5.11
Before the Canterbury earthquakes, most local authorities:

• insured their "above-ground" property with Civic Assurance. Civic is owned by local authorities, and has a long history of providing insurance services to them;
• insured their "below-ground" water management infrastructure for fresh water, stormwater, and sewage (primarily the pipes), and flood protection assets (such as stopbanks and floodgates), through LAPP, a charitable trust formed and administered by Civic.¹¹

5.12
In 2009, because of its substantial reserves and with a reinsurance programme managed by Civic Assurance, LAPP extended the cover offered to local authorities to both above- and below-ground assets.

5.13
Civic Assurance told us that 27 local authorities took up this offer, including Christchurch City Council,¹² which insured its below-ground and above-ground assets with LAPP for 2010/11 – the period of the Canterbury earthquakes. The other local authority most affected by the earthquakes, the Waimakariri District Council, was a LAPP member for its below-ground infrastructure and insured its above ground assets with Civic.

5.14
LAPP had insurance from Civic Assurance for Christchurch City Council's above-ground component, and Civic arranged reinsurance¹³ cover for those properties.

5.15
LAPP provided Christchurch City Council with cover for the below-ground component, using a mixture of self-insurance from the LAPP fund and reinsurance.

5.16
Figure 6 shows Christchurch City Council's insurance arrangements for the period of the earthquakes – 1 July 2010 to 30 June 2011, and insurance recoveries received or projected.

Figure 6
Christchurch City Council's insurance arrangements for 2010/11 and recoveries received or projected

Insurance arrangements	Entities and roles for 2010/11 insurance	Insurance recovery
Above-ground	Above-ground reinsurers (which insure Civic Assurance)	$600 million (projected)
	Civic Assurance (which insures LAPP)
	LAPP (which insures the Council)
	Christchurch City Council
Below-ground	LAPP (which insures the Council)	$201 million (paid)
	Below-ground reinsurers (which insure LAPP)

5.17
We explain more about these arrangements below.

Civic Assurance

Reinsurance recoveries

5.18
As we noted in our June 2013 report, the Canterbury earthquakes had a significant effect on Civic Assurance. Civic has received claims on more than 900 properties as a result of the earthquakes. As Civic's above-ground property reinsurance programme for the period 30 June 2010 to 30 June 2011 was uncapped, most of the cost of the earthquake claims falls on Civic's reinsurers.

5.19
In contrast, the cost to Civic Assurance of the September 2010, February 2011, and June 2011 earthquakes was capped at $3.6 million for each event – a total of $10.8 million.¹⁴

5.20
As at 31 December 2013, Civic Assurance notes that:¹⁵

• The outstanding liability for Canterbury earthquake claims was $590 million (2012: $826 million).¹⁶
• All but $5 million of the $590 million is covered by Civic's reinsurance arrangements, so Civic's net outstanding claims liability is $5.0 million. Of this amount, $2.9 million relates to Civic's remaining exposure to the Canterbury earthquake claims, and the remaining $2.1 million relates to Civic's other business-as-usual exposures.
• Not all of Civic's reinsurers have agreed to meet in full the claims made. Civic is attempting to resolve disputes with two of its reinsurers, AIG and R+V Versicherung AG (R+V), through arbitration.

5.21
The amounts in dispute that Civic Assurance considers that AIG and R+V are liable for total about $100 million. Civic believes that it will succeed in both disputes. Civic has included the disputed amounts in its overall reinsurance recoveries (that is, as an asset in its 31 December 2013 financial statements).¹⁷ Civic also considers that it has other options to recover the shortfall if its claims against the two reinsurers do not succeed.

5.22
Civic Assurance's disputes with reinsurers also affect LAPP and, potentially, Christchurch City Council. The disputes concern the above-ground cover that LAPP provided to the Council in 2010/11, but not the below-ground cover. Civic is managing the disputes with the reinsurers on LAPP's behalf. LAPP disclosed information about the disputes with reinsurers in its 30 June 2013 financial statements, as noted in paragraph 5.54.

5.23
Until the disputes are resolved or other options for recovery pursued, there is some uncertainty about Christchurch City Council's insurance recoveries. The Council disclosed information about insurance recoveries in its 2013 annual report (page 146). We note these disclosures in paragraphs 5.71 to 5.75.

Civic Assurance's activities after the earthquake

5.24
For a period after the Canterbury earthquakes, from July 2011 to July 2012, Civic Assurance has been unable to renew its property reinsurance programme or secure suitable property reinsurance from any other source.

5.25
Although Civic Assurance has had access to property reinsurance from July 2012, it was unable to write any property insurance because its claims payable credit rating was reduced in 2011 to "B+, negative watch".

5.26
The Reserve Bank of New Zealand has issued Civic Assurance with a provisional licence to carry on insurance business under the Insurance (Prudential Supervision) Act 2010, and Civic intends to apply for a full licence. However, a condition of the provisional licence is that Civic does not offer any new business.

5.27
Although Civic Assurance cannot accept any new insurance business for the time being, it continues to offer local authorities insurance products through Civic Property Pool, a charitable trust similar to LAPP. Civic also administers another mutual liability fund (called Riskpool), which is used by 58 local authorities for professional indemnity and public liability insurance.

5.28
The disputes with the two reinsurers need to be resolved before Civic Assurance can restore a claims payable credit rating of "A-" or better, which is needed before it can again offer material damage cover. The arbitration with AIG was completed in March 2014 but the outcome is not yet known. The arbitration with R+V was set for later in 2014, if settlement could not be reached beforehand.

Civic Assurance's financial position from 2010 to 2013

5.29
The Civic Assurance group made after-tax losses from the year ended 31 December 2010 to the year ended 31 December 2013. Most of these losses were because of the costs of dealing with the Canterbury earthquake claims. The biggest losses were in 2010 ($4.0 million) and 2011 ($5.4 million). Civic's equity decreased from $19.5 million to $10.1 million in that period.

5.30
Figure 7 below summarises key financial information for the Civic Assurance group from 2009 to 2013.

Figure 7
Civic Assurance group equity and profit (loss) from 2009 to 2013

	2009 $m	2010 $m	2011 $m	2012 $m	2013 $m
Equity	19.49	15.47	10.08	12.97*	12.35
Profit (loss)**	0.74	(4.01)	(5.39)	(1.28)	(0.62)

* Paragraph 5.31 explains the increase in equity between 2011 and 2012, despite the after-tax loss.

** Total comprehensive profit (loss) net of tax.

5.31
In early 2012, Civic Assurance offered shareholders the option of buying more shares in the company. It raised more than $4 million from 48 local authorities through this share offer. Civic carried out a second share offering later in 2012.¹⁸ Although it made an after-tax loss in 2012, it also raised $4.17 million from the share issue. Overall, this resulted in an increase in Civic's equity from 2011 to 2012. The loss in Civic's most recent financial year was smaller.

5.32
The directors of Civic Assurance have continued to regard the company as a going concern throughout the period of the after-tax losses.

5.33
Despite the losses in the last four years, Civic Assurance had equity of $12.35 million as at 31 December 2013.

Our audit reports for 2012 and 2013

5.34
In our audit report on Civic Assurance's 31 December 2012 financial statements, we drew attention to disclosures in the financial statements that referred to the going-concern assumption being appropriately used in preparing the financial statements, despite there being uncertainties about the outcome of reinsurance issues and when Civic will resume its normal business activities (see Appendix 4).

5.35
As the disputes with reinsurers remained unresolved at 31 December 2013, we included a similar comment in our audit report on Civic Assurance's 31 December 2013 financial statements. The comment noted the unresolved disputes were subject to arbitration, and that there was uncertainty about:

• when Civic would be able to resume its normal business activities; and
• whether Civic will make sufficient profits to allow all of its deferred tax asset¹⁹ to be recovered.

5.36
We also noted that the validity of the going-concern assumption on which the financial statements were prepared depends on, among other matters, limiting Civic Assurance's net outstanding claims liability to $5.0 million.

5.37
Overall, we said that we considered Civic Assurance's disclosures about these matters in its financial statements to be adequate.

Local Authority Protection Programme Disaster Fund

How LAPP started

5.38
From 1991, Government policy has been to pay 60% of the costs of restoring water and sewage services after natural disasters, if the affected local authority can show that the damaged assets had been properly maintained and can meet the remaining 40% through other means (such as reserves, insurance, or mutual assistance schemes).²⁰

5.39
As a means for local authorities to cover their 40% share, Civic Assurance, along with Local Government New Zealand, established the LAPP mutual assistance scheme on 1 July 1993. It was set up as a charitable trust.

How LAPP works

5.40
Members make an annual contribution to LAPP in return for cover for the cost of restoring their infrastructure as a result of a damaging event. Contributions are set at a level that covers the expected risk, administration costs, and re-insurance premiums.

5.41
Members pay an annual contribution based on factors such as the risk or exposure of the member to a damaging event in its region, the value of the assets held by the member, and the state of repair, maintenance, and condition of the member's infrastructure.

5.42
In some years, the annual contribution includes a significant component for building the LAPP fund. This allows LAPP to cover some of the risk itself. LAPP's reinsurance arrangements are organised by Civic Assurance on LAPP's behalf.

5.43
LAPP meets insurance claims from a combination of assets in the mutual fund and reinsurance purchased from the global market.

5.44
Before the Canterbury earthquakes, member contributions and excesses had generally been falling, while values covered had more than doubled.

5.45
Members' contributions for below-ground cover increased significantly after the Canterbury earthquakes, to help rebuild the LAPP fund.

5.46
Figure 8 shows below- and above-ground contributions²¹ to the LAPP fund from members in the period 30 June 2009 to 30 June 2013.

Figure 8
Contributions from LAPP fund members, 2008/09 to 2012/13

Members' contributions	2008/09 $m	2009/10 $m	2010/11 $m	2011/12 $m	2012/13 $m
Below-ground	5.05*	3.17	11.43	14.12	9.0
Above-ground	0	0.038	2.38	0.036	0

* Includes "new entrant" contributions of $1.68 million. Local authorities that had joined the LAPP fund before September 2010 were required to pay an additional levy to the fund.

Effects of the Canterbury earthquakes on LAPP

5.47
The Canterbury earthquakes have had a significant effect on LAPP. LAPP had one below-ground automatic reinstatement²² so, although the September 2010 and February 2011 earthquakes were covered, the below-ground damage from the 13 June 2011 earthquake was not covered by LAPP's reinsurers.

5.48
LAPP had built up a total fund of $37.6 million by 30 June 2010. LAPP was then in its eighteenth year. In that time, there had been only a small number of claims and one medium-size claim after the February 2004 Manawatu floods. Because it had not had any large claims since being formed in 1993, LAPP had substantial reserves.

5.49
As noted in paragraph 5.12, in 2009 LAPP extended the cover offered to local authorities to include above-ground and below-ground assets. LAPP offered this cover for the three years from 2009/10 to 2011/12, and 27 members took it up. LAPP did not receive any above-ground contributions in 2012/13.

5.50
Figure 9 shows the size of the LAPP fund and LAPP's profit or loss from 2009 to 2013.

Figure 9
LAPP fund/equity and profit (loss) from 2008/09 to 2012/13

	2008/09 $m	2009/10 $m	2010/11 $m	2011/12 $m	2012/13 $m
Equity	36.9	37.6	(1.6)	2.6	8.8
Profit (loss)	3.44	0.68	(39.3)	4.3	6.2

5.51
In its annual report for the year ended 30 June 2013, LAPP noted that:

• Before the 4 September 2010 earthquake, LAPP's best estimate of Christchurch City Council's 40% exposure to a one-in-a-thousand-year earthquake for damage to its below-ground assets, using GNS Science models, was $17 million. However, because LAPP buys its reinsurance based on its whole membership, LAPP was able to pay the Council more than ten times this amount.
• It had settled its below-ground claims from the 2010 and 2011 Canterbury earthquakes. LAPP has paid about $15.4 million to Waimakariri District Council and about $201.5 million to Christchurch City Council.
• The cost of replacing Christchurch City Council's below-ground infrastructure will exceed $2 billion, so the cost to the Council for its 40% share will be more than $800 million.²³

5.52
As noted in paragraph 5.13, LAPP also provided above-ground cover for Christchurch City Council for 2010/11, for which it has insurance from Civic Assurance. This is why the two disputes with reinsurers affect LAPP and, potentially, Christchurch City Council. Like Civic, LAPP has not made any adjustments to estimated reinsurance recoveries in its 30 June 2013 financial statements. LAPP believes that the amounts in dispute are legally payable.²⁴ As noted above, the disputes are about the above-ground cover provided by LAPP, not the below-ground cover.

5.53
LAPP has made similar disclosures to those of Civic Assurance in its most recent financial statements about measuring gross claims liabilities and reinsurance recoveries. LAPP's June 2013 financial statements note the following:²⁵

There are considerable uncertainties surrounding the measurement of gross claim liabilities and the related reinsurance recoveries arising from the Canterbury earthquakes. These arise from a number of factors including longer than normal claims development periods and the extent of damage.

Gross outstanding claims liabilities total $649 million (2012: $880 million) of which the majority is the estimate of outstanding claims liabilities arising from the Canterbury earthquakes. This estimate represents loss assessors' estimates as at 30 June 2013 of what LAPP will ultimately pay, prior to receiving any reinsurance recoveries [...]

Given the nature and number of uncertainties associated with the Canterbury earthquakes, the actual claims experience may deviate, perhaps substantially, from the gross outstanding claims liabilities as at 30 June 2013. Any changes to estimates will be recorded in the accounting period when they become known.

After reinsurance and other recoveries, the net outstanding claims liabilities for the Canterbury earthquakes amounts to $7.0 million as at 30 June 2013 ($24.2 million as at 30 June 2012).

5.54
For reinsurance recoveries receivable, LAPP's June 2013 financial statements note that Civic Assurance is in arbitration with two of the LAPP fund's reinsurers. This arbitration relates to the limits of the cover under the above-ground reinsurance programme. However, based on legal advice, LAPP believes that the amounts accounted for as receivable are legally payable. Accordingly, the financial statements do not include any adjustments to the reinsurance recoveries receivable.

LAPP's ongoing operations after the earthquakes

5.55
In its 30 June 2013 annual report, LAPP notes that most of the reinsurers on its 2010/11 reinsurance programme were not prepared to renew their arrangements after the earthquakes. LAPP also notes that, in the two years between June 2010 and June 2012, the cost of its reinsurance programme increased seven-fold. For LAPP's 2013/14 renewal, reinsurance rates halved, but are still 3.5 times more than they were in 2010/11. This means LAPP is not buying as much reinsurance protection now as it did in 2010/11, but it does have more cover than it was able to buy in 2012/13.

5.56
After consultation with its members, from 1 July 2012 the gap between what LAPP can afford to fund and the reinsurance deductible is covered through a mutual self-insurance arrangement between its members. For 2012/13, in the event of a major catastrophe, members were liable for five times their annual contribution as "mutual self-insurance".²⁶ This provided up to $45 million of cover, and was adopted as a means of speeding up the rebuild of the LAPP fund while keeping the LAPP contributions manageable for the members.

5.57
For 2013/14, members are liable for four times their annual contribution as mutual self-insurance. For 2014/15, members are expected to be liable for three times their annual contribution as mutual self-insurance should there be a major catastrophe.

LAPP membership

5.58
LAPP had 59 local authority members as at 30 June 2010 and 58 members at 30 June 2013. However, 12 members left the fund as of 1 July 2013, bringing the membership to 46 from a potential 78.²⁷ More local authorities have since given notice of leaving the fund.²⁸

Going concern

5.59
LAPP's process of rebuilding the fund has resulted in equity of $8.8 million as of 30 June 2013 (2012: $2.6 million).²⁹

5.60
Figure 10 shows how the size of the LAPP fund has changed since it was formed.

Figure 10
Size of the Local Authority Protection Programme fund, 1993-2014

5.61
LAPP's 2013 financial statements were prepared on a going-concern basis. Despite the fact that some members left the fund and others have given notice of their intention to leave (effective 1 July 2014), the trustees considered they had good reasons to believe the fund would continue as a going concern. There was strong support among remaining members, equity of $8.8 million (which is before receiving the 2013/14 contributions), and payments made from the fund are discretionary.

5.62
The chief executive of Civic Assurance told us that LAPP expects to retain or increase the number of members. He notes that, as members receive no payment when they leave, leaving means gifting the remaining LAPP fund to continuing members. This is a disincentive to leaving for some members.

Our audit report on LAPP's 30 June 2013 financial statements

5.63
In our audit report on LAPP's 30 June 2013 financial statements, we drew attention to disclosures in the financial statements that referred to the considerable uncertainty for measuring the gross claims liabilities and the related reinsurance recoveries arising from the Canterbury earthquakes. We considered the disclosures about these matters to be adequate. The audit reports in 2011 and 2012 also drew attention to those uncertainties.

5.64
In our 2013 audit report, we accepted that LAPP is a going concern and did not consider it necessary to draw attention to the trustees' going-concern statement.

The future of LAPP

5.65
Despite the loss in membership, the Chairman of LAPP is optimistic about LAPP's future. He has noted that, as the fund grows and reinsurance rates continue to normalize, the amount covered by mutual self-insurance can reduce. As shown in Figure 9, at 30 June 2013 the fund had increased to $8.8 million from $2.6 million the year before. It is projected to be $14.8 million by 30 June 2014.

Christchurch City Council's position

5.66
Christchurch City Council's financial statements continue to be affected by the 2010 and 2011 Canterbury earthquakes (see paragraphs 6.20-6.23 and Appendix 4).

5.67
The proceeds from insurance recoveries are expected to make a significant contribution to the funding for Christchurch City Council to rebuild after the Canterbury earthquakes.

5.68
Christchurch City Council has estimated the total cost of the earthquake response and recovery to be $4.4 billion. The Council has estimated that proceeds from its insurance claims will contribute around $1.0 billion towards funding rebuild costs, with a further $1.8 billion covered by the Crown's contributions. This results in an estimated Council contribution of $1.6 billion.³⁰

5.69
Both LAPP and Christchurch City Council's 2013 annual reports contain detailed information about rebuilding infrastructure and facilities and costs.³¹ This information includes that:

• For buildings, facilities, and other assets, forecasts assume that the Council secures insurance settlements for rebuilding/repairing its assets on a like-for-like basis (less a 2.5% excess). Any betterment, such as improvement or strengthening, is to be funded through a $225 million improvement allowance.
• For major buildings and facilities, such as the Town Hall, Art Gallery, Centennial Pool, and Lancaster Park (formerly AMI stadium), agreement is still to be reached between engineers acting for the Council and for the insurer on the extent of the damage, the method of repair (if any), and the expected cost.
• LAPP contributed $201 million for below-ground assets, which was the maximum possible given its reinsurance programme.

5.70
LAPP's annual report for 2013 notes that the cost to the Council of meeting its 40% share of replacing below-ground infrastructure will exceed $800 million and is considerably more than the LAPP fund had been able to contribute.

Insurance and other recoveries

5.71
The Council's 30 June 2013 financial statements include "insurance/recovery" revenue of $373 million (2012: $575 million) and earthquake recoveries receivable of $345 million (2012: $345 million). These amounts reflect costs incurred and recoveries recognised for the Council ³² based on information available at 30 June 2013.

5.72
Of the insurance/recovery revenue, about $76 million is insurance proceeds; about $295 million is government grants or other assistance; and $2 million is other earthquake-related revenue. The insurance recoveries for the year reflect the value of claims for demolished and damaged buildings and facilities. The Council's financial statements note that no major insurance settlements were concluded in the year ended 30 June 2013.

5.73
The earthquake recoveries receivable of $345 million includes $176.2 million (2012: $140.5 million) for the Council from the proceeds of insurance recoveries. The Council has noted that a portion of the recoveries receivable due from insurers is dependent on settling claims with reinsurers.³³

5.74
Accounting standards³⁴ require that insurance recoveries can be recognised in financial statements only when there is "virtual certainty" of receiving them. The Council noted that the virtual certainty threshold had been met and revenue recognised in some but not all instances. Where the virtual certainty threshold had not yet been met, the Council treated the recovery as a contingent asset.³⁵

5.75
The Council noted that the ultimate outcome of future recoveries could not be reliably measured at 30 June 2013, and there will continue to be uncertainty about this matter for several years.³⁶

5.76
We did not consider it necessary to draw attention to the potential effect of the dispute between Civic Assurance and two of its reinsurers in our audit report on the Council's 30 June 2013 financial statements. We considered the Council's disclosures about insurance and other recoveries to be adequate.

---

10: Controller and Auditor-General (2013), Insuring public assets.

11: Government policy since 1991 has been that the Crown will meet up to 60% of the cost of restoring water and sewage infrastructure services after a catastrophe and the local authority must meet the other 40%.

12: We summarised Christchurch City Council's insurance arrangements from 2007 to 2010, including the change to insuring above ground property with LAPP in 2010/11, in our 2012 report, Inquiry into how Christchurch City Council managed conflicts of interest when it made decisions on insurance cover.

13: Reinsurance is insurance purchased by an insurer that transfers a portion of the insurer's risk to other parties (the reinsurers). The reinsurers assume some of the risk in return for a share of the premium that the insurer receives.

14: Civic Assurance (2012), 2011 Annual Report, page 4.

15: Civic Assurance (2014), 2013 Annual Report, notes 3d and 23 to the financial statements cover Canterbury earthquake claims and going concern.

16: The decrease in Civic's outstanding claims between the two financial years is mainly a result of updated information on costs of claims from Civic's loss adjusters.

17: In 2013, Civic Assurance won a dispute on behalf of LAPP against another reinsurer, The New India Assurance Company Limited. The amount involved was just under $20 million.

18: The closing date for the capital raising has been extended several times and is currently extended until December 2014. This has been to allow time for further local authorities to take up the offer and to ensure that there was more certainty around the recovery of the disputed reinsurance receivables.

19: Civic Assurance has a deferred tax asset of $3.88 million, but needs to return to profitability to realise the benefit of the tax asset. Civic has investment income and administration fees of more than $3 million a year, and can make a profit without writing insurance. Civic's loss in 2013 was because of the cost of administering the Canterbury earthquake claims and the legal costs of its disputes.

20: The 60/40 split between central and local government is set out in The Guide to the National Civil Defence Emergency Management Plan (revised in June 2009).

21: LAPP began separately recording above-ground and below-ground contributions from members in its 30 June 2011 annual report, but included comparative information for 30 June 2010.

22: A provision in an insurance policy that results in insurance cover continuing to be provided after an event that results in a claim.

23: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, chairman's report, page 2.

24: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, note 5 to the financial statements, page 15.

25: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, note 4 to the financial statements, page 14.

26: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, page 3.

27: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, page 4.

28: Members have to give one year's notice, but Civic Assurance believes that some will have done so merely to preserve their options and might yet remain members of the fund.

29: Civic Assurance has advised that LAPP's unaudited accounts to 28 February 2014 show equity of $14 million.

30: Christchurch City Council (2013), Annual Report 2013, page 145.

31: New Zealand Local Authority Protection Programme Disaster Fund (2013), 2013 Annual Report, page 2; Christchurch City Council (2013), Annual Report 2013, pages 145-146.

32: These amounts are for the Council, not the Council group.

33: Christchurch City Council (2013), Annual Report 2013, page 197. The claims referred to here are the disputes between Civic Assurance and the two reinsurers.

34: NZ IAS 16: Property, Plant and Equipment and NZ IAS 37: Provisions, Contingent Liabilities and Contingent Assets (paragraphs 31-35 of NZ IAS 37 explain the "virtual certainty" threshold).

35: Christchurch City Council (2013), Annual Report 2013, page 146.

36: Christchurch City Council (2013), Annual Report 2013, note on contingent assets and liabilities, page 147.

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