Global equity will cover quake damage

The Earthquake Commission will initially call in some of its $1.7 billion in global equity investments to pay for damage claims from the Canterbury earthquake.

The commission's chief financial officer, Phillip Jacques, said its $6 billion investments were structured to not include New Zealand equities to avoid further economic upheaval from cashing in investments to pay for natural disasters.

"We think it will mostly be covered by cash from global equities," he said in an interview.

Mr Jacques said the Earthquake Commission (EQC) would pay the first $1.5 billion in claims, its overseas' insurers the next $2.5 billion and the EQC anything additional to that.

Global equities could be cashed up within days and Mr Jacques said such was the amount of money involved, it would have a minimal impact on the value of those equities.

The cost of the earthquake has been calculated at $2 billion and Mr Jacques said after overseas equities, New Zealand bank bills would be its next source of funds, those investments on a 31-day rolling maturity cycle to minimise economic impact.

People with private insurance can claim up to $100,000 for damage to buildings from the EQC, and $20,000 for contents, after which it is up to their private insurers.

He doubted the commission would need cash for a few weeks until the cost of repairs had been calculated, but said from then on it would be quite easy to get the necessary cash.

ANZ Bank chief economist Cameron Bagrie said the EQC had ample liquidity to meet expected claims.

EQC investments

• $6 billion invested.

• $1.7 billion in global equities.

• $150 million of cash in New Zealand registered banks.

• $4 billion NZ Government bonds.

• $174 million Treasury bills.