The Charter Reinsurance Company Limited

The Charter Reinsurance Company Limited ("Charter") wrote a London Market Excess of Loss book from 1986 to November 1993 when it ceased writing new business. In December 1993 the Directors promoted their own Scheme of Arrangement, which was not approved and in June 1994 Charter petitioned the Court for the appointment of Provisional Liquidators. Charter brought an action against one of its reinsurers over the issue known as "Pay as Paid". This matter was heard before the House of Lords in 1996, which found in favour of Charter, and held that prior payment was not a condition precedent to the making of reinsurance recoveries.

At a meeting held on 22 September 1999, a new Scheme of Arrangement ("the Scheme") for Charter was overwhelmingly approved by its creditors. The High Court in London formally sanctioned the Scheme on 11 October 1999 and the Scheme became effective on 12 October 1999. The cumulative recoveries made since the appointment of the Joint Scheme Administrators have amounted to a total of £7.43 million and US$56.93 million.

The Scheme was a "crystallisation scheme" which used a sophisticated actuarial estimation methodology, which placed a value on the company's future liabilities. By crystallising Charter's liabilities in this way it accelerated line run-off and reduced to a few years a process which might otherwise have taken 20-30 years.

The first interim dividend of 25% was distributed to creditors in November 2001; however, those creditors affected by the market losses 'Exxon Valdez' and/or 'Kuwait Airways' did not receive an interim dividend as their claims had been suspended under clause 16.10 of the Scheme in the absence of a market wide solution. The Scheme Administrators subsequently implemented a strategy agreed with the Creditors' Committee for dealing with the 'Exxon Valdez' and 'Kuwait Airways' losses to bring forward the closure of the Scheme. The Scheme process was accordingly reactivated in July 2003 for those principals who had had their claims suspended under clause 16.10; the balances for these principals were accordingly crystallised in March 2004. Following crystallisation, these principals received a first interim dividend of 25% and all principals received at the same time a second interim dividend of 57% in May 2004. A final dividend was paid in July 2005 bringing the total percentage distributed to all creditors to 90.83%, following which the Joint Scheme Administrators concluded that no further dividends could be paid. Therefore, in accordance with Clause 48.1.2 of the Scheme, the final report of the Scheme was distributed and the Scheme terminated on 19 December 2005.

A winding up order was made on 26 April 2006, to place the company into compulsory liquidation, and a meeting of creditors was held on 6 September 2006.

Creditors were required to submit a new proof of debt form to rank for dividend purposes in the liquidation. A notice of intended dividend was sent to all creditors in April 2008.

A first and final dividend under the compulsory liquidation of 2.78p in the £ was declared in July 2008.

The final dividend has now been paid.  The total dividend paid was 90.85%.

The compulsory liquidation of Charter Re was completed on 29 September 2008 following a final meeting of creditors.  The company was dissolved on 11 January 2009.