High Court Sanctions largest ever solvent pool scheme - 2008-07-23
On Thursday 17th July in the High Court Mr Justice David Richards sanctioned the largest series of solvent Schemes proposed to date (82 separate Schemes) relating to the EW Payne pools. Scheme Creditors voted overwhelmingly in favour of the Schemes at meetings held on 4th July and 11th July 2008.
The EW Payne Pools Schemes comprise 82 companies representing over 120 original underwriting entities from various countries including UK, France, Germany, Switzerland, USA and Japan. The pools have been in Run-Off for over 20 years having underwritten business from 1960 to 1985.
Scheme adviser Mike Walker, Head of KPMG's Restructuring Insurance Solutions practice in the UK, commented:
"In dealing with such a large number of entities it was crucial to have simplicity and transparency in the process. The flexibility of the scheme procedure allowed us to design an efficient and effective mechanism to collapse the pool".
He continued
"The issue of old underwriting pool liabilities can be frustrating for pool participants, pool mangers and creditors alike. It is clearly open for these stakeholders to use this effective mechanism to draw a line under these pool liabilities and obtain genuine finality. The fact that these 82 Schemes were enthusiastically backed demonstrates that this appetite exists".
The EW Payne Scheme is unique in a number of ways including:
- the provision for payment of contingent liabilities to each creditor regardless of whether or not they formally submit a claim
- an innovative methodology for calculating IBNR using a simple calculation rather than more complex, common actuarial methodologies
This landmark case involved AirSP Members Reinsurance Solutions as Pool Managers and Edwards, Angell Palmer and Dodge as legal advisors.
This news item has been produced by Reinsurance Solutions Ltd
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