Administrators of the Kwelm companies will next month ask creditors to agree to an early closure of one of the largest insolvency run-off s undertaken in the insurance industry, revealed a report.
Administrators for the five insolvent London market insurers that collapsed in 1990 owing billions of dollars, known by the acronym Kwelm, said early closure would offer creditors the prospect of receiving between 58 and 76% of the amount due.
According to the report, Chris Hughes and Ian Bond, the scheme administrators, said that compared with average distributions of 47%. The level of potential payout was substantially higher than expected when the scheme was put in place ten years ago.
They said early closure proposals predicted that the bulk of the US$1.3bn (£742m) held for payment to creditors would be paid within two to three years if the early closure was accepted. The original timetable for settlement extended beyond 2015.
The administrators recommended early closure as being in the best interests of creditors, and the route to maximum payment within the shortest time, said the report.
The Kwelm companies were part of the London United Investments Group, specialising in US casualty, professional indemnity and other liability insurance business. More than 90% of the assets and liabilities are in dollars and most of the policyholders are in the US, said the report.
Total funds recovered now exceed $3.1bn, with total liabilities estimated at $5.8bn, including a $1.2bn special margin, concluded the report.
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