Christchurch earthquake victims holding policies with
collapsed Queenstown company Western Pacific Insurance could be
more than $16 million out of pocket - or 33% down on their
Total policyholder claims against Western, from the September
2010 earthquake and the devastating February 2011 quake total
$48.2 million, but after estimates of the reinsurance
recovery payouts, the policyholders face a $16.1 million
shortfall, according to liquidators Grant Thornton's latest
two-monthly creditors' report.
''We expect there will be a shortfall of funds available for
claims and also expect that the quantum of claims may
increase as assessment of same is completed,'' Grant Thornton
said, reiterating predictions from an earlier report last
That meant is was ''unlikely'' any funds would be available
for separate creditors of the company, whose estimate of
losses stands at $27.6 million.
Boutique insurer Western, whose directors were
Queenstown-based Graham Smolenski and his brother in-law Jeff
McNally, held 7000 policies around the world, with total
potential liabilities of more than $10 billion, but fell over
in April 2011 following claims for just $6 million of the
first quake-related claims, and initial creditor claims of
Total claims by creditors and policyholders then spiralled to
Grant Thornton had retained the reinsurance treaties during
the liquidation by paying $430,000 in premiums, with a
further $2 million premium owed for 2011 treaties.
Grant Thornton said it expected the reinsurers to offset that
$2 million owed, and said estimated recoveries due stood at
A court case last year determined that reinsurance payout
would go the Christchurch earthquake victims, as opposed to
being paid to any other insured parties and creditors.
Once the losses from the two earthquakes were quantified,
Grant Thornton would then be able to begin recovering
The list of Western's 24 reinsurers used during 2010-11
includes three Lloyd's syndicates, as well as companies based
in Sweden, Barbados, Singapore, India, Australia and
Findings in 2011 by Grant Thornton noted Western had accepted
risks ''outside the scope of its reinsurance policies'' and
''in some instances, premiums were too low''.
Western was able to operate with just a $500,000 bond lodged
with Perpetual Trustees, and amid the potential liabilities
of more than $10 billion, that included policies offered in
Australia, Chile, Vanuatu, Abu Dhabi and numerous Pacific
Island countries. Western had applied for membership of the
Insurance Council of New Zealand several years ago, but was
rejected, although the council declined to say why.