Creditors and some policyholders of failed boutique Queenstown company Western Pacific Insurance are likely to miss out on about $27.6 million in claims, as liquidators edge closer to paying out Christchurch earthquake victims.
More claims against Western are expected in the coming months.
Western, whose directors were Queenstown-based Graham Smolenski and his brother-in-law, Jeff McNally, of Victoria, Australia, was placed in voluntary liquidation in April last year. Total claims by policyholders and creditors eventually topped $65 million.
Operating with just 15 staff, Western had 7000 policies worldwide, and total liabilities of $10 billion, but collapsed because of $6 million in estimated claims from earthquake policy holders ($1.95 million) and unsecured creditors ($3.88 million).
Liquidators Grant Thornton's latest report to claimants, released this week, said total estimated claims now stood about $64.9 million, with expectations Western's overseas reinsurers would have about $34 million available for earthquake claimants.
However, the estimated shortfall to creditors has risen from $24.2 million, as stated in the third statutory report filed in April, to $27.6 million.
"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 the same is completed," the liquidators said this week.
The list of 24 reinsurers used by Western during 2010-11 includes three Lloyd's syndicates, and companies based in Sweden, Barbados, Singapore, India, Australia and Malaysia.
Liquidators had secured reinsurance policies by paying premiums owed of $430,000 to reinsurers, with a balance of premiums due during 2011 of $2 million, which is expected to be offset by the reinsurers as they make payments to the liquidators.
Liquidators said there were "significant unremitted premiums" held by unnamed insurance brokers which they were continuing to recover.
Of the $34 million expected from the reinsurers, this was for claims arising from the Canterbury earthquakes of September 2010 and February 2011, in the latter of which 185 people died.
A month ago, Western's credit rating was withdrawn by international rating agency Standard and Poor's, out of Melbourne, for having been in liquidation for more than 13 months.
An order in June by the High Court at Wellington made provision for the banks ANZ-National, Kiwibank and Rabobank to be paid from reinsurance payments for reinsurance premium advances.
Also ordered were payments of liquidators' costs and the legal counsel for the Canterbury policyholders, who required a separate High Court determination last year on the allocation of pending payments from the reinsurance proceeds.
Estimates of claims against Western Pacific Insurance
• Claims, Sept 2010 earthquake ... $14.1 million
• Claims, Feb 2011 earthquake ... $34 million
• Other New Zealand claims ... $1.24 million
• Australia claims ... $13.5 million
• Pacific/other claims ... $2.01 million
• Total ... $64.9 million outstanding
• Reinsurance recovery ... $34.7 million
• Reinsurance premiums due ... $2.52 million
• Estimated shortfall ... $27.6 million
