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NEW ZEALAND LOCAL GOVERNMENT
INSURANCE CORPORATION LIMITED
trading as Civic Assurance
STATEMENT OF INTENT
FOR THE YEAR ENDED 31 DECEMBER 2007
TABLE OF CONTENTS
1.0 Mission Statement 2
2.0 Corporate Goals 2
3.0 Nature and Scope of Activities 3
4.0 Performance Targets and Measures 3
5.0 Financial Projections 4
6.0 Dividend Policy 4
7.0 Reporting to the Shareholders 4
8.0 Accounting Policies 5
9.0 Acquisition of Shares in any Company or Organisation 5
10.0 Transactions with Related Parties 5
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1.0 Mission Statement
Mission Statement of:
New Zealand Local Government Insurance Corporation Ltd
trading as Civic Assurance
To ensure the long-term provision of stable, cost effective, and
proactive risk financing solutions for the local government
sector.
2.0 Corporate Goals
The principal goal of the Company is to operate as a successful business.
The specific goals of the Company are:
2.1 To optimise the cost of risk for local government by:
2.1.1 providing risk financing products to cover property and liability risks; these risk
financing products may include insurance, risk pooling, mutual funding and
trust operations
2.1.2 providing service programmes designed to prevent losses; these service
programmes may include training and educational loss prevention.
2.2 To facilitate the provision of and support for a secure, competitive superannuation
scheme which meets the needs of local governments and their staff.
2.3 To investigate and facilitate as appropriate new products and markets which will
prove beneficial to our shareholders, clients and their staff.
2.4 To maximise expansion opportunities into compatible markets outside the local
government sector where this expansion will support and enhance the services
provided to the local government sector.
2.5 To perform continual reviews of the Company’s operating strategies, reinsurance
facilities, financial performance and service delivery.
2.6 To report performance and operating results to shareholders six-monthly.
2.7 To maintain as a minimum a claims paying ability rating of A (Excellent).
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2.8 To operate personnel policies and practices within the Company which will
promote a non-discriminatory, culturally sensitive, equal opportunity work place
and to be a good employer.
3.0 Nature and Scope of Activities
The Company has the primary role of providing long term value to its shareholders and
clients through the provision of cost effective insurance and risk financing solutions for the
local government sector.
3.1 In terms of its traditional insurance activities, the Company offers local
government:
added insulation against the well proven swings in insurance cycles;
a benchmark for the market, which provides Civic’s products as a stable
choice and also assists in creating a competitive market;
strong, long term reinsurance and underwriting facilities;
an insurance and risk financing vehicle working primarily to satisfy the
needs of local government;
risk management programmes designed to mitigate loss; and
the advantages of bulk buying.
3.2 The Company provides administration and ancillary services for mutual funding
and trust initiatives such as the New Zealand Local Authority Protection
Programme Disaster Fund (LAPP), the Local Government Global Superannuation
Scheme (Superplan and SuperEasy) and Local Government Mutual Funds Trustee
Limited (Riskpool).
3.3 The Company will investigate opportunities to sell its products and services to
markets which are compatible with the local government sector where this will
support our core local government business.
3.4 Ownership of property provides the Company with a diversity of investment risk as
well as the Company’s offices and a centre for local government.
4.0 Performance Targets and Measures
4.1 Financial returns: to achieve a profit before tax of 12.5% of net equity.
4.2 Financial strength: the annual claims paying ability rating by AM Best to confirm a
minimum rating of “A (Excellent)”.
4.3 To provide insurance services to at least 85% of local authorities.
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4.4 To be acknowledged as the preferred supplier of superannuation and KiwiSaver in
particular for the local government market.
4.5 To continue as Fund Manger for Riskpool and Administration Manager for LAPP
efficiently and effectively.
5.0 Financial Projections
Year Ended 31 December 2007 31 December 2008 31 December 2009
Pre-tax Surplus $2,243,000 $2,325,000 $2,409,000
Cost of Dividend $1,259,000 $1,326,000 $1,393,000 6.0 D
Imputed Dividend per share 13.2 cents 13.9 cents 14.6 cents
Net Asset Value $18,600,000 $19,269,000 $19,950,000 i
Net Asset Value per share $2.91 $3.02 $3.12 v
idend Policy
The dividend policy up to 2001 was to pay the maximum amount of the net surplus while
retaining the desired level of financial strength. Generally this represented a dividend in
the order of one-third of the pre tax surplus.
In 2001 it was decided to cease dividends for a period in order to increase the company’s
capital base with this policy being annually reviewed. Having reached a net asset value of
$14.6 million at the end of 2004, fully imputed dividends of 12 and 12.6 cents per share
has been paid to shareholders in 2005 and 2006.
Future dividends will depend on the Company’s results, the business opportunities
available to it and maintenance of the capital base requirements.
7.0 Reporting to the Shareholders
Draft Statement of Intent for the Company by 23 February 2007.
Adopted Statement of Intent for the Company by 13 April 2007.
An annual report for 2006 by 31 May 2007 containing:
A review of the Company’s operations by Directors
Statement of Financial Performance
Statement of Movements in Equity
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements
Auditors Report on the above Financial Statements
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A report for the first half of 2007 by 30 September 2007 containing:
Directors’ Report - a review of the Company’s operations
during the half year
Unaudited half-yearly accounts
8.0 Accounting Policies
The financial statements have been and will be presented in accordance with the
Companies Act 1993 and have been and will comply with the requirements of the
Financial Reporting Act 1993 and the International Financial Reporting Standards from
balance date 31 December 2007.
The Generally Accepted Accounting Practices as recommended by the Institute of
Chartered Accountants for the measurement and reporting of profits on an historical cost
basis have been followed by the Company.
9.0 Acquisition of Shares in any Company or
Organisation
The Company will only invest in the shares of another company or organisation if the
Directors consider the investment will produce added value to the Company.
Any acquisition which is equivalent to 50% or more of the Company’s assets will fall under
the definition of a “major transaction” in the Company’s Constitution and approval of the
shareholders will be sought in accordance with the Constitution. Any acquisition which is
equivalent to 25% or more than 25% but less than half of the Company’s assets will fall
under the definition of a “minor transaction” in the Company’s Constitution, and
consultation with shareholders will take place.
10.0 Transactions with Related Parties
The Company has 74 local authority Shareholder Members plus TrustPower (holding
2.1%). The Local Government Superannuation Trustee Limited, Local Government
Mutual Funds Trustee Limited and New Zealand Local Government Finance Corporation
Limited are wholly owned subsidiaries of the Company. Transactions with Shareholder
Members include a full range of insurance and other risk financing services, retirement
related financial services and debt financing services.
Transactions with Shareholder Members will be on a wholly commercial basis. Charges
from Shareholder Members and charges to Shareholder Members will be made for
services provided as part of the normal trading activities of the Company and its
subsidiaries.
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