Troubled AMI Insurance, which holds a $500 million Government guarantee to cover Christchurch earthquake claims, is reported to be edging closer to clinching a major capital injection.
Market speculation has been high in recent weeks that AMI is in negotiations with several parties to seek recapitalisation, with Prime Minister John Key saying in late September there was interest from around the world.
Any Government assistance included the right for it to take ownership and having control of the company.
Craigs Investment Partners broker Peter McIntyre yesterday said the range of investment was likely to be $150 million to $200 million, with Tower and Insurance Australia Group (IAG); which operates State Insurance and NZI in New Zealand, considered the frontrunners.
Other interested parties are reported to be Suncorp and even US investment company Berkshire Hathaway, APN New & Media have said.
AMI, the country's second largest residential insurer, has a 35% share in the Christchurch market with an estimated exposure of up to $600 million, prompting the Government in May to pledge the $500 million back-up package.
Mr McIntyre said IAG had recently raised $325 million of retail bonds in New Zealand and already had reinsurance policies in place.
"There has been widespread interest in AMI. But it will have to be a bigger player to take it on," he said.
"Buyers will want to maintain a diversified book themselves with Christchurch/Canterbury in proportion to other risks," he said.
Up to a point, the rebuilding effort in Christchurch has been hampered by insurance companies not being able to get their reinsurance coverage in place, holding up construction because new policies cannot be issued.
Mr McIntyre it was "crucial" for AMI bidders to have reinsurance already in place.
