Sept. 29 Deadline For KWELM Creditor Claims

NU Online News Service, May 19, 12:23 a.m. EDT?An accelerated time frame for the runoff and bankruptcy of KWELM companies--which include El Paso Insurance, Lime Street Insurance and Mutual Reinsurance--will bar the acceptance of creditor claims after Sept. 29, KWELM announced.

KWELM companies are subsidiaries of the failed London United Investments plc., which specialized in U.S. casualty, professional indemnity and other liability insurance business. Other units include Kingscroft Insurance and Walbrook Insurance

The company said the scheme to wrap up the business will mean higher payouts.

Creditors of the insolvent London-based KWELM insurance companies will receive an average additional 7 percent payout across the five companies, according to the 10th annual report for 2003, issued last week. This increases their total payments to date to between 44 percent and 62 percent across the five companies, KWELM said.

The report also confirmed that the creditors and the courts have approved a closure program which will see the bulk of funds paid to creditors within a further three years, instead of 11 under the original scheme. It sets Sept. 29 as the final date by which creditors must submit details of any claims.

Among other items in the report:

? Funds for distribution to creditors increased to $2.5 billion.

? Cumulative gross reinsurance recoveries now exceed $2 billion.

? $246 million were recovered in 2003.

? Cumulative agreed claims now exceed $3.1 billion.

? Claims processed and agreed in 2003 totaled $142 million.

KWELM said the closure procedure should see completion of the runoff and further significant returns to creditors within three years.

Over 90 percent of the KWELM assets and liabilities are in U.S. dollars, and most of the policyholders are based in the United States.

The companies and creditors entered into a court-approved "Scheme of Arrangement" in 1993, the objective of which is to pay out to valid creditors the maximum sum in the minimum timescale. The scheme was amended in 2004 to permit early closure.

Chris Hughes and Ian Bond, the "scheme administrators" responsible for the runoff of the businesses, said: "We believe we will substantially conclude the runoff within a further three years, and we now predict an eventual average return to creditors in the range 58 percent to 76 percent."

They added: "We continue to receive very positive feedback from creditors; the runoff to date is regarded as a success. The distributions achieved are a good reward for creditors' support and patience, and the product of a sustained high-quality performance from the specialist runoff company we have established--KWELM Management Services Ltd."

KWELM said it continues to work proactively with creditors to assist them through the closure procedure. The firm said creditors are encouraged to attempt to settle their claims before the bar date.

Special Reports /

Sept. 29 Deadline For KWELM Creditor Claims

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