Claims against failed insurer hit $65m

JOHN EDENS IN QUEENSTOWN
Last updated 08:12 03/12/2012

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Earthquake-related claims lodged with the liquidator of failed Queenstown-based insurance firm Western Pacific have gone up by nearly $2 million.

Last year, in the High Court, Justice Simon France directed that claims arising from the Canterbury earthquakes were entitled to Western Pacific reinsurance proceeds, which meant creditors were unlikely to receive any funds.

Western Pacific, run by Graham Smolenski and Jeff McNally, went into voluntary liquidation in April last year.

Claims have hit $65m, according to the latest report by liquidators Simon Thorn and David Ruscoe, of Grant Thornton.

The report said they were continuing efforts to establish company debtors, which included premiums held by various brokers and individual policyholders.

"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."

Canterbury policyholders with claims over the September 2010 and February 2011 quakes were updated to $14m and $34.4m respectively.

Claims for the 2011 quake hit $32.5m in February this year.

The Inland Revenue Department has a claim of $87,559 and updated overall unsecured claims were $18.3m.

A team had accessed Canterbury Earthquake Recovery Authority and Earthquake Commission records identifying damage caused to insured properties by the quakes and was reviewing the material, the report said.

Once quake losses were quantified, the liquidators would start recovering reinsurance proceeds, and an inquiry continued into whether any voidable transactions were recoverable and whether the company traded recklessly.

Justice France's decision meant other policyholders and creditors were not entitled to funds because $34m of reinsurance would be used to pay Canterbury claims.

Western Pacific, set up in 2005, collapsed when exposed to quake claims. Insurers use reinsurance to protect them against big losses.

 

WESTERN PACIFIC UPDATED CLAIMS
September 2010 earthquake $14.1m
February 2011 earthquake $34m
Other New Zealand claims $1.2m
Australia claims $13.5m
Pacific and other claims $2m
Total $65m
Reinsurance recovery estimate $34.7m
Reinsurance premiums due $2.5m - Source: Grant Thornton New Zealand

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- The Southland Times

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