While outstanding claims against Western Pacific from the 2010 and 2011
quakes total $75.1million, reinsurance recoveries since the liquidation amount to only $38.2million; and even then, the latter has $12.4million outstanding.
A court case several years ago determined 216 Canterbury claimants from the quakes had priority over other people insured elsewhere to get the proceeds of the reinsurance payments from liquidator Grant Thornton.
While the bottom-line of claims is $75.1million, the reinsurers’ payments of $38.2million suggest a $36.9million shortfall for earthquake claimants, but there was a further debt to unsecured creditors, understood to be about $17million. Western offered 7000 policy-holders around the world insurance cover amounting to $10billion, but was put in liquidation in April 2011 when it was unable to pay just $6million in Canterbury earthquake claims.
Western was placed in liquidation by its owners, Queenstown businessman Graham Smolenski and his brother in law, Jeff McNally, from Australia.
No individual or company has been held to account over Western Pacific’s business practices, which years before the liquidation had its application to join the Insurance Council of New Zealand rejected.
The liquidators, Grant Thornton accounting and advisory firm, were asked whether any legal action was being considered, but declined to comment.
Liquidator David Ruscoe from Grant Thornton said in a statement this week the first payment to Western Pacific’s Canterbury policy holders were mainly holders of commercial buildings.
"Unfortunately, Western Pacific had insufficient reinsurance in place to be able to fully deal with the extent of the losses," Mr Ruscoe said.
The initial distribution was 35% of the value of accepted claims for the September 2010 Christchurch earthquake, and 20% for the February 2011 earthquake.
Mr Ruscoe said the different level of pay-out for each earthquake was because of the different level of re-insurance held by Western Pacific, and because of the higher value of claims for the February earthquake.
Further payments are expected to be made "over the next few months" once more money was received from reinsurers, he said.
Mr Ruscoe estimated additional payments for the 2010 earthquake claims would range from 20% to 40% of assessed losses and between 15% and 20% for the 2011 claimants.
At a glance
Six years on ... Western Pacific liquidators’ first payout
• 2010 quake policy holders
98 owed $26.7 million.
Initial payment 35%, second payment 20% to 40% — in theory total 55%-75% payout.
• 2011 quake policy holders
118 owed $48.4 million.
Initial payment 20%, second payment 15% to 20% — in theory total 35%-40% payout.
— SOURCE: GRANT THORNTON
