The Federal Government has proposed a major strengthening of APRA’s crisis management powers and has released a consultation paper containing wide-ranging proposals for financial services reform that are now open to industry comment.
In May a Parliamentary Joint Committee on Corporations and Financial Services concluded its report into the collapse of Trio Capital Ltd which will have significant repercussions for financial lines insurers in Australia.
What distinguishes the Trio Capital collapse from the other major financial collapses in Australia in recent years, of Westpoint and Storm Financial, is that Trio involved a fraud. The enquiry adopted observations by Justice Peter Garling of the New South Wales Supreme Court describing the scheme as:
On 5 October 2011, the NSW Supreme Court upheld an application pursuant to s 440D(1) of the Corporations Act 2001 (Cth) (the Corporations Act) for leave to bring and continue proceedings against a defendant under voluntary administration.
Over the past few months there have been a number of insurance portfolio transfers and a winding up of a general insurer. Various judges of the Federal Court have considered aspects of the Insurance Act (Cth) 1973.
Portfolio transfers
There have been two scheme transfers of insurance portfolios from Australian branches of overseas insurers to Australian subsidiaries. While objections to the transfers were raised, the Federal Court confirmed the schemes.
Amaca Pty Ltd v McGrath & Anor as liquidators of HIH Underwriting and Insurance (Australia) Pty Ltd [2011] NSWSC 90
In Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation), the plaintiffs were the liquidators of Great Southern Managers of Australia Limited (GSMAL).
Your insurer goes bust – can you as an insured claim the reinsurance proceeds? An important decision in the NSW Supreme Court gives useful guidance on when a court will allow departures from the statutory scheme controlling the application of reinsurance proceeds (Amaca Pty Ltd v McGrath & Anor as liquidators of HIH Underwriting and Insurance (Australia) Pty Ltd [2011] NSWSC 90).
The insurer goes broke, and there are all these claimants at the door…
Key Points: The fact that you're a very big company doesn't mean you needn't follow the legal rules for the execution of documents.
Background
A large insurance company claimed to be a creditor of Ungul, a property developer. Ungul was in voluntary administration.
A meeting of Ungul's creditors was called for 11 June. The insurance company's solicitors contacted the administrator and said that:
In a closely-watched case stemming from the demise of the Australian HIH insurance group, the UK House of Lords has ruled in McGrath & Anor & Others v Riddell and Others [2008] UKHL 21 that the English assets of four companies in that group, which are in liquidation in Australia and in ancillary insolvency proceedings in England, must be remitted to Australia for distribution under Australian insolvency law.