A judicial manager has been appointed by the Federal Court following the collapse earlier this year of Transpacific Insurance Corporation, which may have left some run-off claims it was dealing with unpaid.

Transpacific accepted a portfolio transfer from Australian Family Assurance (Austfam) in 2002, and had been managing the associated run-off claims until director Ian Douglas put Transpacific into liquidation.

Austfam was formed in 1990 and went into run-off in 2000 after its directors decided it could not meet new prudential regulatory requirements. The company’s founder, Ross Porter, then set up an underwriting agency, AFA Pty Ltd, which he says is “trading profitably”.

“The situation has led to a fair bit of confusion in the market,” Mr Porter told insuranceNEWS.com.au. “We’ve been responding to and contacting brokers assuring them that AFA has nothing to do with the Austfam run-off.

“Up until the failure of Transpacific the run-off had been going smoothly and profitably.

“Now we’re very concerned that people are confusing the old insurance company with our existing and reputable underwriting agency. The two companies have nothing at all to do with each other.”

Mr Porter says Transpacific met all its contractual run-off obligations from January 1 2000 until several months ago, when it went into provisional liquidation. AFA immediately informed the Australian Prudential Regulation Authority (APRA), because it feared some claims may still be outstanding.

“This development had the potential to adversely affect the orderly and profitable run-off of Austfam,” Mr Porter said. “We’re waiting to hear the final position from the Transpacific liquidator to see if he is able to continue to meet the company’s obligations to Austfam.”

The judicial manager – McGrath Nicol partner Murray Smith – is expected to report back to the Federal Court in the near future on the future viability of the Austfam run-off.

See ANALYSIS, May 11, Transpacific sinks, and it’s no great loss.