Life offices refute 'inaction' claims over KSFIOM bondholder cash

The Manx Insurance Association (MIA), which represents life offices on the IoM, says the life industry "has worked diligently" to represent bondholders.

It adds it is in the process of lobbying the IoM Government to ensure any compensation scheme "recognises the full interest of all policyholders".

The KSFIOM Depositors Action Group (KSFIOMDAG) had accused life companies of failing to "push to get 100%" of bondholders' trapped money returned.

It says life companies have over £300m trapped in the collapsed bank collectively. A decision on a compensation scheme is due today.

But Paul Quirk, MIA chair, says: "The life industry has worked diligently, both at an individual company level and through the MIA and ALIO, to ensure the interests of all policyholders are best represented.

"We will continue to lobby and have appropriate legal representatives at all stages of the ongoing process until a final resolution is reached."

Axa Isle of Man and Royal Skandia add they have always called for a full return of depositors' money.

In an affidavit to the IoM Government, Royal Skandia writes: "We made it clear that the overriding objective of both the liquidator provisional and all the other interested parties must still be to ultimately achieve a 100% return for all KSFIOM depositors."

The decision as to whether a Scheme of Arrangement (SOA) or Depositors Compensation Scheme (DCS) would be used to return depositors' money in KSFIOM was postponed by the Isle of Man Government from 19 February to 9 April when the final version of the proposed SOA is expected.

Royal Skandia says it has asked the Government to provide a clear statement the return under the proposed SOA will be "no less favourable" than under liquidation and that all creditors, regardless of the size of their deposits, should be treated equally.

The affidavit also says continuing delays occurring as the SOA is prepared have lead directly to financial hardship for bondholders.

"In our view these issues could be alleviated by an immediate payment of 12.5%, which we believe is financially viable as the accounts already published by the liquidator provisional indicate sufficient funds have already been recovered," it continues.

"Therefore, as those funds are guaranteed, we feel they should be returned without delay," it reads.

Mike Foy, managing director, Axa Isle of Man, says: "Our prime intent is to ensure that our customers achieve the fullest recovery possible for their deposits in KSFIOM.

"The KSFIOM situation has undoubtedly cast a shadow over the Isle of Man."

The KSFIOMDAG has persisted in its accusation life offices have failed to properly represent the interests of bondholders since the collapse of KSFIOM.

Repeating its stance this week, it said: "At no point have life companies pushed to get 100% of bond holders' money back, which is what bondholders want.

"There has been a delayed reaction among bondholders [to the magnitude of the problem] and many people were hoping the life companies would make something happen."

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• Topics
• Offshore Investment
• Isle of Man