Queenstown-based Western Pacific Insurance Ltd - which has about 7000 policyholders around the country - has been placed in voluntary liquidation by its directors, over concerns about its solvency.
Liquidators said they were "urgently" working through insurance polices, checking validity and reinsurance contracts.
Western Pacific - which has a total 155 claims for the Christchurch earthquakes from both September and February - had offered a range of commercial and domestic insurance and acted as underwriting agent and preferred broker.
Grant Thornton New Zealand Ltd spokesman David Ruscoe said the company was appointed liquidator by directors Jeffrey McNally, of Australia, and Graham Smolenski, of Queenstown, last Friday.
Mr Smolenski was a founder of Millbrook resort, director and its chief executive.
Mr Ruscoe said the "directors of Western Pacific became concerned about the solvency of their company" - prompting the voluntary liquidation.
While Mr Ruscoe gave few more details on Western Pacific's trading, Standard and Poor's primary credit analyst Michael Vine said Western Pacific's "limited capital resources were overwhelmed by two catastrophe reinsurance programme net retentions of $1 million in a short period of time, and the shareholders' failure to inject sufficient capital to maintain solvency at a time of stress".
The financial flexibility of its shareholders to support the company when in need "proved not forthcoming, beyond an interim injection of around $500,000, late 2010", Mr Vine said.
Liquidator Mr Ruscoe said, "We are checking that all insurance policies are in place and valid and that all reinsurance contracts are in order," he said.
In a letter posted on its website in January, director Jeffrey McNally said said he was pleased that Western Pacific had "successfully renewed our reinsurance treaties" last December, for calendar 2011.
Western had negotiated a total 15 reinsurers for 2011, with three dropping out and being replaced by two others, while there were a total seven Lloyds syndicates on the 2011 panel.
Accounts filed with the Companies Office, for the full trading year ended June 2009, show Western Pacific received $6 million income from premiums and underwriting fees.
For the year its expenses were $5.6 million, leaving an after-tax profit of $241,000, which compared with a 2008 profit of $281,000.
At the end of the year, it had $1.2 million cash in short-term deposits, and during the year initiated a share buy-back and returned $592,000 to Western's shareholders.
In January, Western Pacific had a B investment rating from international agency Standard and Poor's but that was yesterday downgraded to R - for "regulatory action".
In January, Mr McNally wrote: "2011 is Western Pacific's sixth year in business and we see it as a year of opportunities for continued growth within the New Zealand market and a year that Western Pacific further entrenches itself as a credible alternative provider of commercial and personal lines insurance to the SME [small to medium enterprises businesses] broker market."
Mr Ruscoe said yesterday Grant Thornton was giving priority to claims from the Christchurch earthquakes, of which the liquidators understand there were 78 September claims and 77 claims from February.
"We know people will be worried about their situation and so we're urgently working through these issues," Mr Ruscoe said in a brief statement yesterday.
The company's website said yesterday Western also did business in Asia, through its wholly owned subsidiary Western Pacific Asia and associated company, Entertainment Insurance Brokers.
Western Pacific had also been developing business in the Pacific Islands, in association with local insurance companies and broking firms.
Mr Ruscoe said policyholders were being contacted through their brokers and Western Pacific's claims department continued to operate and taking claims.
