KPMG partner Tony McGrath, the provisional liquidator for Australia’s HIH Insurance Ltd., released his provisional estimates on Friday confirming the insurer’s mounting debts – the minimum deficit now reaches A$2.7 billion ($1.4 billion).
The losses could well continue to increase McGrath warned, as more unpaid claims and invoices are received and settlements are reached with reinsurers. His worst case estimate puts losses at A$4 billion ($2.08 billion) which would make HIH’s collapse Australia’s biggest bankruptcy ever.
While state and federal governments have put in place plans to help the worst affected Australian policyholders, concern remains that the losses could affect the country’s overall economy, by dampening an expected increase in home sales, and reducing general confidence, especially among foreign investors.
The complete report is still being prepared. It’s due to be presented to the court in Sydney on June 18th. McGrath’s preliminary findings make clear, however, that HIH’s financial condition had been deteriorating dramatically for over a year before it called in the liquidators, and raises further questions about the apparent failure of regulatory authorities, notably the Australian Prudential Regulation Authority, to investigate its finances.
As yet no charges have been brought as a result of the apparent irregularities, but the assets of three former directors, including founder Ray Williams, have been frozen by the court at the request of securities regulators, and the three have been told not to leave the country.
Was this article valuable?
Here are more articles you may enjoy.