$1m of failed insurer's funds to collect

Liquidators of failed Queenstown boutique insurer Western Pacific Insurance have yet to collect almost $1 million in premiums from brokers and individual policyholders.

Western Pacific was placed in liquidation in April last year, total claims at the time by policyholders and creditors amounting to up to $65 million, but only about $34 million was available in funds from global reinsurers.

Liquidators Grant Thornton have just released their latest six-monthly report, to the end of October, which shows $48.3 million is owed to Canterbury earthquake claimants.

After the Canterbury earthquakes in September 2010 and February 2011, Grant Thornton is looking to recover more than $34 million from 24 reinsurers around the world, which will allow payments to be made to Canterbury claimants.

Grant Thornton said "significant unremitted premiums" were held by brokers, and the balance of debts still to be collected stood at almost $942,000.

"Recovery action is ongoing in respect of the balance of outstanding debtors, which includes using debt collection agencies and taking actions as per broker agreements," the liquidators said.

The liquidators are working with the Canterbury Earthquake Recovery Authority and the Earthquake Commission, having obtained access to their respective records.

Aside from the Canterbury claimants, the other estimated unsecured claims total $18.34 million, including other insurance claims of $16.4 million and trade creditors' claims of $1.1 million.

Grant Thornton said it was not yet possible to determine if any dividend would be available to pay the ordinary unsecured creditors but "it appears unlikely".

Similarly, for preferential creditors, such as staff who were owed almost $118,000 and the IRD which was owed $87,559, it was unknown yet "what distribution, if any" would be available for them until the recovery of outstanding debts, Grant Thornton said.

Western Pacific collapsed because of $6 million in estimated claims from earthquake policyholders ($1.95 million) and unsecured creditors ($3.88 million), but it was later revealed it had 7000 policies worldwide and total liabilities of up to $10 billion.

Western Pacific's directors were Queenstown-based Graham Smolenski and his brother-in-law, Jeff McNally, of Victoria in Australia.

Grant Thornton noted the liquidation was "unlikely" to be completed in the next six months.

simon.hartley@odt.co.nz

 

 

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