Pre-commutation inspections can identify “unproven” claims and secures multi-million pound discounts. A case study illustrates.
A London Market insolvent estate, our Client, had complex global involvements with a major international insurance group. Gross balances ran into hundreds of millions of dollars.
The international insurance group was attempting to set off amounts owing from its UK subsidiary to the insolvent estate against amounts due to its US parent by the insolvent estate. All parties were raising contractual placement (non-disclosure and misrepresentation) issues and alleging failure adequately to prove balances owing and due. The insolvent estate needed to conduct an inspection of the records of the US parent companies to substantiate or otherwise these allegations prior to a global commutation.
By leading and directing a team of the insolvent estate’s own staff, JTW conducted a comprehensive premium, claim and accounting reconstruction exercise across all of the insurance group’s US-based companies. The validity of claims presented and the reasonableness of and justification for outstanding loss reserves was also thoroughly investigated. The findings were incorporated into the “bullets” to be fired across the table during commutation discussions.
The insolvent estate secured a discount of several million dollars from the incurred and IBNR claims sought by the international insurance group for its US liabilities.