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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 August.
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 $3.8 million.
Total claims by creditors and policyholders then spiralled to $65 million.
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 $34 million.
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 reinsurance proceeds.
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 Malaysia.
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.