July 4, 2005 by Canadian Underwriter
The Property and Casualty Insurance Compensation Corporation (PACICC) recently implemented measured to begin refunding dividends totaling $19.8 million to its member companies. PACICC recovered these funds through insurance company liquidations.
The dividends PACIC is refunding stem from six of the ten liquidation funds it manages representing the insolvencies of Advocate General, Ontario General, Beothic General, Canadian Universal, Maplex General, and Hiland Insurance.
Most PACICC members will receive their dividend payments during the second half of 2005, however some companies with more complex portfolios may take longer to receive monies. Refunds concerning situations where dividends must be allocated to reflect portfolio transfers among companies are some such situations.
“This is a positive step, recently approved by the Corporation’s board of directors as a means of getting dividend refunds to members sooner,” PACICC’s President Paul Kovacs says.
Previously PACICC did not initiate the refund process until the insolvent insurer was complete and the court-appointed liquidator discharged. Kovacs says this took a lot of unnecessary time over ten years. Legally, PACIC is able to return 80% of liquidation funds before the court process has finalized.
PACICC members are assessed when an insurer becomes insolvent and according to their market share for the funds required by the liquidator to pay covered claims to policyholders. PACICC continues the liquidation and eventually recovers funds as a creditor. Monies recovered from insolvent insurers by PACICC have ranged from as low as 30 cents on the dollar to as high as 100 cents on the dollar.
The repayment of these monies does not adversely affect PACICC’s operating fund or budget as Kovacs says the insolvency funds have always belonged to the members, not to PACICC itself.