WFUM Pools

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WFUM Pools – Background FAQs

The contents of this website are not a substitute for the contents of the Scheme document (which includes the Scheme and the Explanatory Statement). Scheme Creditors (as defined in the Scheme) should read and consider carefully the full text of the Scheme document.

Frequently Asked Questions

1 What are the WFUM Pools?

2 What is a Scheme of Arrangement?

3 What is the "WFUM Pools Scheme"? Is this a solvent Scheme?

4 What is the position of Sovereign Marine & General Insurance Company Limited ('Sovereign')?

5 Who will be affected by the Pool Scheme?

6 Why have I been sent the letter dated 10 October 2007?

7 Has my broker been made aware of this development?

8 What should I do if I cannot trace any involvement with WFUM?

9 How will reinsurance obligations be affected under the Scheme?

10 Why have Sphere Drake reconvened their Creditors Meetings now?

11 Is Municipal General Insurance Ltd (MGI) included in this Pool Scheme?

12 Could a Scheme Company revert to run-off once the Scheme has commenced?

13 Does the Pool Scheme cover Employers' Liability and other compulsory insurance policies?

Please also refer to the  Scheme FAQs. These FAQs provide important information to Creditors in relation to the WFUM Pools schemes.

In addition section 8 of the Explanatory Statement includes a number of questions and answers: this document is held on the Scheme documentation page of the website.

1 What are the WFUM Pools?

Willis Faber (Underwriting Management) Limited ('WFUM'), Devonport Underwriting Agency Limited ('DUAL') and Willis Faber & Dumas Limited ('WFD') formerly underwrote and / or managed insurance business on behalf of a number of insurance companies. The 16 companies that were part of the WFUM Pools are listed on the WFUM Pools Companies page. These are referred to as the 'WFUM Pools Companies'.

For the avoidance of doubt, Municipal General Insurance Limited's ('MGI') (insolvent) share of DUAL is handled by MGI's Scheme Administrator and is subject to its Scheme of Arrangement. MGI only participated on the DUAL pool and is not included in this Pool Scheme. Refer to Question 11 for details relating to MGI.

The company with the largest participation (approximately 50% of the estimated liabilities) in the WFUM Pools is Sovereign Marine & General Insurance Company Limited ('Sovereign') which is insolvent. Additionally, some of the other companies in the WFUM Pools have been in run-off for a number of years.

A brief description of the business written by the WFUM Pools is available on the WFUM Pools Scope and Stamps page.

The WFUM Pools stopped accepting new insurance and reinsurance risks in 1991, since which time they have been in run-off.

PRO Insurance Solutions Limited ('PRO') is the pool run-off manager and has administered the WFUM Pools business since 1998.

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2 What is a Scheme of Arrangement?

A Scheme of Arrangement is a compromise or arrangement between a company and some or all of its creditors or any class of them entered into pursuant to section 425 of the Companies Act 1985 of England & Wales, which becomes legally binding on a company and its creditors or any class of them, if:

 
  • a majority in number representing not less than 75% in value of the creditors or class of creditors present and voting in person or by proxy, vote in favour of the Scheme of Arrangement at a meeting or meetings to be convened with the permission of the Court; and
 
  • the Court subsequently sanctions the Scheme of Arrangement; and
 
  • an office copy of the order of the Court to that effect is delivered for registration to the Registrar of Companies.

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3 What is the "WFUM Pools Scheme"? Is this a solvent Scheme?

16 Participants of the WFUM Pools proposed Schemes of Arrangement pursuant to section 425 of the Companies Act 1985. 14 of the proposed schemes were sanctioned by the High Court of Justice on 17 September 2007. Regarding one of the remaining companies, the Sphere Drake Insurance Limited scheme was sanctioned by the High Court of Justice in England and Wales on 5 November 2007. Together, these schemes are referred to as the WFUM Pools Scheme. The company with the largest share of the pools, Sovereign, is insolvent and together with its solvent subsidiaries, Sovereign UK and Greyfriars, it makes up approximately 50% of the WFUM Pools. The other 12 WFUM Pools companies are solvent.

The Pool Scheme exit route, implements each of the 15 schemes simultaneously, thereby avoiding fragmentation of the Pool, reducing costs and providing earlier payment for Scheme Creditors than would be possible if run-off had continued or if Sovereign went into a scheme alone.

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4 What is the position of Sovereign Marine & General Insurance Company Limited (‘Sovereign’)?

In 1997, Sovereign became insolvent and in January 2000 it implemented a Scheme of Arrangement (‘the Original Scheme’). Under the Original Scheme Sovereign has continued to agree claims in the normal course and has made “scheme payments” on a pro-rata basis to creditors with “Established Scheme Liabilities”. The current scheme payment percentage is 40%.

Sovereign has reached a point with its reinsurance collections and asset realisations where the Scheme Administrators believe that it is time for it and its subsidiaries to enter into a “closing” Scheme. This involves setting up a mechanism to agree the values of claims submitted by policyholders. The value of these claims would then be applied to the reinsurance programme. This would enable valuation statements to be prepared on a net basis for policyholders who are also reinsurers. Once these amounts are known, Sovereign UK and Greyfriars will pay Agreed Claims, less a discount for time value, in full (after applicable set-off) and distribute any surplus assets to Sovereign. In turn final dividends will then be paid by Sovereign and Sovereign formally wound up.

A copy of the latest report to Sovereign's creditors issued by the Scheme Administrators may be viewed and downloaded from the Important Information page.

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5 Who will be affected by the Pool Scheme?

You will be affected by the Pool Scheme if you have a claim against one or more of the WFUM Pools Companies in respect of insurance business written by or on behalf of the WFUM Pools Companies which is included within the Pool Scheme.

All of the business of Sovereign Marine & General Insurance Company Limited ("Sovereign"), and that of its two solvent subsidiaries (Greyfriars Insurance Company Limited and Sovereign Insurance (UK) Limited) will be included. In the case of the remaining solvent WFUM Pools Companies, all liabilities to insureds, reinsureds and brokers arising out of the WFUM Pools, except for any liabilities in respect of UK compulsory insurance, will be included.

To help you identify business included within the Pool Scheme, you can obtain a user name and password for the secure data website from PRO, which will enable you to access your own policy and unpaid claims data as recorded on PRO's systems. Please contact PRO via the Contacts page.

Business to be included in the Pool Scheme is identified in the WFUM Pools Scope and Stamps page on this website. Further information is also included in the Scheme Document which can be viewed on the Scheme documentation page on this website.

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6 Why have I been sent the letter dated 10 October 2007?

You have been sent this letter because PRO’s records in relation to the WFUM Pools show that you, or those that you represent, have in the past held a policy issued by some or all of the WFUM Pools Companies in respect of WFUM Pools business. If you are uncertain as to your position you should speak to your broker or other professional adviser or contact PRO via the Contacts page. See also Question 7.

The letter gives notice of the Scheme Effective Date and Scheme Bar Date and recommends actions that Scheme Creditors should take now.

Other letters sent by PRO in relation to the WFUM Pools are as follows:

 
  • A letter dated 02 December 2005 to:
    Give early notice about the proposed scheme;
    Establish a dialogue and exchange contact details;
    Tell scheme creditors how to get more information about the proposed scheme.
 
  • A “Practice Statement letter” dated 20 January 2006 advised creditors that the WFUM Pools were seeking leave to convene meetings of creditors to vote on the Scheme proposals.
 
  • A “Leave to Convene letter” dated 30 June 2006 notified creditors that leave to convene the Creditor Meetings had been granted by the court and explained the basis of classes of creditor for voting purposes.
 
  • Notice of the “Creditor Meetings” was issued to Scheme Creditors on 31st July 2006.

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7 Has my broker been made aware of this development?

Where PRO has addresses, all known brokers or intermediaries whom PRO believes may have acted for relevant Scheme Creditors in placing business have been informed of developments relating to the WFUM Pools.

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8 What should I do if I cannot trace any involvement with WFUM?

You can access your secure area on the website and review the data presented by PRO. If no data is present then you should contact your broker or intermediary who should be able to advise you of any involvement you may have with the WFUM Pools. You can also contact PRO using the WFUM Pools helpline, details are available on the Contacts page.

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9 How will reinsurance obligations be affected under the Scheme?

Scheme Claims valued under the Scheme will be used to establish outward reinsurance claims values for set-off with Scheme Creditors who also reinsure the WFUM Pools.

The reinsurance claims will be discounted to reflect the time value of money. Undiscounted Agreed Claims will be processed through the reinsurance programme and discounting, at the rates set out in the Estimation Methodology, will be applied to the resulting value where appropriate. Scheme Creditors which are reinsurers will also be given the opportunity to review and, if necessary, dispute the calculation of the reinsurance claims against them. However, this review and dispute does not extend to challenging the valuation of the inwards claims values that have become binding or such values being applied to contracts by which the Scheme Company is reinsured in respect of such agreed claims for the purposes of set-off.

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10 Why have Sphere Drake reconvened their Creditors Meetings now?


The two Meetings of the Scheme Creditors of Sphere Drake to vote on its proposed Scheme – namely:

1)    the Meeting of its Scheme Creditors in relation to their Scheme Claims other than IBNR claims; and
2)    the Meeting of its Scheme Creditors in relation to their IBNR claims,

were opened on 27 October 2006 but were adjourned, prior to any votes being taken (the “Original Meetings”). An adjournment was called because Sphere Drake had received notification of several claims at levels which were markedly higher than the previously advised claim values suggested and which, therefore, gave rise to issues which Sphere Drake wished to seek to resolve with the Scheme Creditors concerned prior to holding the vote. Following the Original Meetings, PRO and Sphere Drake worked with the Scheme Creditors concerned to identify and resolve the issues which had arisen. Sphere Drake has been able to reach a commercial resolution with each of those Scheme Creditors and they will no longer be submitting votes at the Meetings.

Sphere Drake is therefore reconvening the Original Meetings to be held on Friday 19 October 2007 commencing at 11.00am with registration from 10.00am. (the “Reconvened Meetings”).

The venue for the Reconvened Meetings is:
The offices of Sidley Austin LLP
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA
England

A copy of the letter giving notice of the Reconvened Meetings and explaining how voting forms may be submitted is available on the Important Information page.

Please contact PRO for further information.

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11 Is Municipal General Insurance Ltd (MGI) included in this Pool Scheme?

MGI is the subject of its own Scheme of Arrangement and is not included in the WFUM Pools. Queries relating to MGI should be directed to the Scheme Administrators:

· Post: MGI, Frensham Suite, Friary Court, 13 - 21 High Street, Guildford GU1 3DG
· E-mail: Mike.Suckling@MGI-Ltd.co.uk
· Telephone: 01483 303 176
· Website: http://www.mgi-ltd.co.uk/

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12 Could a Scheme Company revert to run-off once the Scheme has commenced?

No, the Scheme does not include a clause allowing the Scheme Companies to “revert to run-off”.

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13 Does the Pool Scheme cover Employers' Liability and other compulsory insurance policies?

In respect of the solvent Pool Companies other than Sovereign Insurance (UK) Limited and Greyfriars Insurance Company Limited it is not intended to crystallise claims under UK compulsory insurance policies in the Scheme of Arrangement. They will therefore be dealt with outside the scope of the Pool Scheme in the normal way. To the best of their knowledge and following due enquiry, the directors of Sovereign Insurance (UK) Limited and Greyfriars Insurance Company Limited do not believe that either company has any liabilities in respect of UK compulsory insurance.

As Sovereign Marine & General Insurance Company Limited is an insolvent company all of its liabilities in respect of UK compulsory insurance will be subject to the Pool Scheme, although Scheme Creditors whose claims against Sovereign which are protected by virtue of the Policyholders Protection Act 1975 will, subject to eligibility, still be entitled to receive payments from the Financial Services Compensation Scheme.

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Sovereign Marine & General Insurance Company Limited
8 Salisbury Square
LONDON
EC4Y 8BB
Registered No: 13855

Greyfriars Insurance Company Limited
8 Salisbury Square
LONDON
EC4Y 8BB
Registered No: 1554007

Sovereign Insurance (UK) Limited
8 Salisbury Square
LONDON
EC4Y 8BB
Registered No: 1618147

Allianz Insurance plc
57 Ladymead
Guildford
Surrey, GU1 1DB
Registered No: 84638

Heddington Insurance (U.K.) Limited
1 Westferry Circus
LONDON
E14 4HA
Registered No: 1298239

Mitsui Sumitomo Insurance Company (Europe), Limited
6th Floor
New London House
6 London Street
LONDON
EC3R 7LP
Registered No: 1063340

The Ocean Marine Insurance Company Limited
St Helen's
1 Undershaft
LONDON
EC3P 3DQ
Registered No: 27204

                                      

Oslo Reinsurance Company (UK) Limited
Quys Cottage
Gainsford End
Toppesfield
Halstead
Essex
C09 4EG
Registered No: 1038441

The Sea Insurance Company Limited
St Mark's Court
Chart Way
Horsham
West Sussex
RH12 1XL
Registered No: 10150

Sphere Drake Insurance Limited
Park Gate
161-163 Preston Road
Brighton
BN1 6AU
Registered No: 516540

Tokio Marine Europe Insurance Limited
150 Leadenhall Street
LONDON
EC3V 4TE
Registered No: 989421

Wausau Insurance Company (U.K.) Limited
31 Great George Street
Bristol
BS1 5QD
Registered No: 1230968