Payouts for Western Pacific clients
Customers of collapsed insurance company Western Pacific are to get their first payout on six-year-old Christchurch earthquake claims, with most receiving less than half what they are owed.
Liquidators of the company have announced how much they will pay policy holders, who are mostly the owners of commercial buildings in the city.
Customers will initially get 20 per cent of the value of accepted claims for the February 2011 earthquake, and 35 per cent for the September 2010 earthquake.
A later payment will be made when more funds are received from reinsurers. These will be between 5 and 20 per cent for 2011 claims and 20 to 40 per cent for 2010.
This means payouts could be as low as 25 per cent for February 2011 claims.
Liquidators David Ruscoe and Richard Simpson, of Grant Thornton, said the payouts differed because of the level of reinsurance held by Western Pacific and the higher value of claims for the second earthquake.
‘‘We always knew this would be a difficult case to manage and it would take time to resolve,’’ Ruscoe said.
‘‘Unfortunately, Western Pacific had insufficient reinsurance in place to be able to fully deal with the extent of the losses.’’
Western Pacific Insurance was placed into liquidation by its shareholders in April 2011 after the small company was overwhelmed by $48 million in earthquake claims.
Buildings affected included the Lichfield Lanes complex around Poplar Lane in central Christchurch, and the suburban Redwood Hotel and Sequoia 88 restaurant. The collapse meant the Lichfield Lanes owners had to sell properties including what is now Dux Central, while the Redwood Hotel was repaired and sold.
Secured creditors included Inland Revenue and employees.
Court action over the collapse led to a ruling that Canterbury policy holders must have first access to reinsurance proceeds, leaving other creditors unlikely to be paid.
One of the developers of Lichfield Lanes, Lisle Hood, said they expected the payouts would cover about half of what they had claimed on their dozen buildings. Their claim was the largest made to Western Pacific.
‘‘It’s disappointing but it’s about what we anticipated,’’ Hood said.
‘‘It’s all taken far too long. There should be legislation put in place to put timeframes on this sort of thing.
‘‘It’s been very, very damaging and has had huge consequences for people’s mental health. This is not what we expected when took the insurance out.’’
Hood said they would now begin to consider whether to develop their remaining land, which was within the innovation precinct.
Western Pacific Insurance was owned by high-profile Queenstown lawyer Graham Smolenski and a related Australian couple, Jeff and Adele McNally.