Failed Queenstown boutique insurer Western Pacific Insurance, which owes more than $65 million to unsecured creditors, has had its credit rating withdrawn for having been in liquidation for more than 13 months.
In a brief statement by international rating agency Standard and Poor's, out of Melbourne, it said it had withdrawn its R (regulatory action) issuer credit ratings on Western because it had remained in liquidation since April 1 last year. Western carried an S&P rating a month before liquidation of B (stable).
Western Pacific had 15 staff and 7000 policies around the world, with total global liabilities of more than $10 billion.
The company hit trouble with meeting claims arising from the Christchurch earthquakes, some of which have since had to be reassessed.
When placed in liquidation last year, it was initially thought to owe about $6 million, but by November, several liquidators' reports later, that figure had escalated to more than $60 million.
Late last year, the High Court allocated $33 million owed by Western's overseas reinsurers for payment, but only to 183 Christchurch earthquake claimants, meaning more than $24.2 million was outstanding.
Total estimated unsecured claims stood at $65 million, the liquidators said. Once the 183 Christchurch claimants were paid, the remaining $24.2 million shortfall would include $13.5 million to Australian claimants, $2 million to Pacific and others, and $1.24 million to New Zealand claimants beyond Christchurch.
Western's directors were Queenstown-based Graham Smolenski and his brother-in-law, Jeff McNally, of Victoria, Australia.
The solvency of the company had prompted the pair to place Western in liquidation.
Mr McNally had only weeks earlier written to the Minister of Finance, Bill English, asking for a bailout in the form of the Government releasing its $500,000 bond and a five-year, $5 million Government guarantee.
However, that was declined by Treasury, which said "there are no reasonable prospects for the business [Western] to continue as an unsupported going concern in the future".
The liquidators said about six months ago it appeared unlikely any money would be available for distribution for "ordinary unsecured creditors".
