Cost of Setanta Insurance liquidation reaches €6m

The costs of Setanta Insurance's liquidation process amounted to just under €6 million up to May of this year, The Irish Times has learned.

This comes as the liquidator of a company that provided administration services to the now defunct insurer has published a notice calling on preferential creditors to lodge their claims by February 2nd 2017.

Deloitte partner David Carson, who is liquidator to Setanta Insurance Services Ltd (SISL), published the legal notice on August 2nd and is seeking preferential creditors to come forward with the particulars of their debts.

SISL provided back-office services to Malta-domiciled Setanta Insurance Company Ltd, which offered motor policies in the Irish market before being liquidated in 2014.

SISL is in voluntary liquidation and its wind-up is separate to that being carried out in Malta by Paul Mercieca, the liquidator to Setanta Insurance. He has estimated that some €90 million is due to 1,736 claimants as part of his liquidation process. The liquidation of SISL came as a complete surprise to the industry, according to senior industry sources.

When contacted Deloitte would say only that the liquidation process for SISL was nearing completion. The firm declined to state what the likely bill would be or how the cost of claims would be met.

Policyholders of Setanta Insurance continue to wait for their claims to be paid by the liquidator. This is the result of a legal dispute in Ireland over who should foot the bill.

The High Court ruled last year that the Motor Insurers Bureau of Ireland should pick up the tab but this is under appeal to the Supreme Court. MIBI was set up to fund payouts in accidents involving uninsured drivers and hit-and-runs.

Its members believe that the Insurance Compensation Fund should foot the bill. This fund was designed to meet the costs of claims where an insurer becomes insolvent, which usually involves a levy being placed on policies for a number of years until the costs have been met.

The minutes of a meeting of Setanta creditors in Malta on June 17th state that delays in settling this legal dispute was “having a severe impact on costs” associated with the liquidation process.

When contacted, Mr Mercieca said he was “extremely frustrated” that MIBI’s appeal had gone to the Supreme Court as “claimants can still not be paid anything”.

He declined to comment on the costs of the liquidation process. However, The Irish Times has learned that they amounted to just under €6 million up to May of this year.

This included €2.3 million in legal and professional fees, €1.1 million in salaries and €2.4 million in claims handling.

Deloitte in Ireland has been engaged to handle claims for Mr Mercieca while Irish law firm Arthur Cox and Ganado Advocates in Malta are also advising him.

The minutes also show that Grant Thornton was replaced as auditors by Mazars. Under Maltese law, the auditors of the liquidation accounts cannot be the same as those who were in office prior to liquidation.