Hope for Western Pacific policy holders

Liquidators of collapsed Queenstown-based insurance company Western Pacific Insurance have paid reinsurance premiums, which they say will hopefully free up $35 million for Canterbury earthquake claims.

The company has approximately 7000 policy holders in New Zealand with significant financial exposure to the recent earthquakes.

In their latest report liquidators David Ruscoe and Simon Thorn, of Grant Thornton said they had secured borrowed funds to pay the reinsurance premiums of about $2.6 million.

“This entire process will take time as there are many questions still unanswered. We have applied to the courts for guidance, especially around who is entitled to potential reinsurance proceeds, which could take up to six months for clarification.

“Being able to pay the reinsurance premiums was a major milestone as the company has no money and we were appointed on the day that the premiums were due, but we managed to borrow the necessary funds to cover the payments,” they said.

The liquidators said their key focus at present was to assess the claims that had already been made.

“We will not be in a position to make any repayments until all claims have been received and assessed, that is why it is important for those who are yet to make claims to do so as quickly as possible,” they said.

What is clear is there will be a shortfall in funds.

The Canterbury earthquake has been a major factor.

Of the $41.2 million in claims to date, approximately $35.2 million is a result of the earthquakes - $14.5 million from the September earthquake and $20.7 million from February.

“We are also reviewing the performance of the directors to ascertain whether there are any actions available to us to recover funds for creditors. These actions can include claims for reckless trading, entering into transactions when insolvent and certain voidable preference payments.”

The first report showed Western Pacific owed $3.8 million to unsecured creditors and $1.9 million in unsettled claims.