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Dyoll liquidators sue Canadian reinsurer

Published:Friday | February 5, 2010 | 12:00 AM

Sabrina Gordon, Business Reporter

The former headquarters of Dyoll Group in New Kingston. - File

THE JOINT liquidators of Dyoll Insurance Company Limited are suing Aon Benfield Canada, formerly Aon Re Canada, in Jamaica's Supreme Court for US$19.86 million, on allegations - denied by Aon - of negligence in its dealings as reinsurance broker to the general insurer, which collapsed in late 2004.

"We have gone four years into the liquidation and have paid out 70 cents in the dollar, and having done that, the JLs (joint liquidators) are now looking at who was responsible, if anyone, for the collapse of Dyoll Insurance," said John Lee of Price-waterhouseCoopers Jamaica, one of the two liquidators appointed to wind up the company. The other is Kenneth Krys of Krys and Associates based in The Cayman Islands.

Dyoll wrote coverage for properties in both countries.

"We have examined what was the cause of the collapse and what we have found out is that the reinsurance that Dyoll bought was inadequate," said Lee.

"We looked to see who advised as to the type of reinsurance to purchase and that was Aon Re."

The court proceedings have already begun, according to Lee, with the letters being served on the company earlier this week.

"We deny the charges," said David Prosperi, vice-president of public relations at Aon Re.

"We intend to fight them vigorously," he told the Financial Gleaner by email.

The liquidators, in a notice to Dyoll creditors, said the decision to pursue litigation was taken, having made little progress in negotiations with Aon Re for a settlement out of court.

"Due to the lack of progress in those discussions and an impending statute of limitations deadline, the JLs decided that commencing the court proceedings was in the best interests of Dyoll to preserve its rights for the benefit of creditors," the notice read.

"In reaching this decision, the JLs retained the services of a reinsurance expert and obtained advice from leading United Kingdom legal counsel, who concluded that there were good grounds to pursue the claim."

Mum on total costs

The men also assured creditors that provision has been made for the potential cost of a court battle.

But Lee declined comment on what the cost was likely to be.

Dyoll Insurance went bankrupt after it was swamped with claims after Hurricane Ivan devastated properties and crops in September 2004. Insurance regulator, Financial Services Commission, took over the company that was then controlled by the Thwaites family and later placed it in receivership after selling off a portion of its insurance portfolio to the GraceKennedy-owned Jamaica International Insurance Company Limited.

According to Lee, the policies for Cayman had a limit of $40 million on claims per event, but all the claims from Ivan's damage were in excess of the limit.

The case involves only Dyoll's property and motor insurance business, covering more than 4,000 creditors, including owners of cars, real estate, and victims of auto-mobile accidents. Most of the creditors live in Jamaica, but those with the larger value claims reside in Cayman.

The current litigation does not affect Jamaican coffee farmers whose claims have already been settled, Lee said.