The settlement could be viewed as both good and bad news.
Settling the claim for less than what was owed was a good thing for AIC, but the $11 million price tag was not good for AICPQ holders, at least on the surface.
I never expected a settlement that high. Years ago, I would have offered Granite Re $1 million and told them they had 48 hours to make a decision. The price would go down $100,000 per week from there. A little humor there.
AICIQ has limited assets and would never be able to resolve the claim outside of a reorganization plan.
AIC has assets - $40 million at 9/30/15 with about $12.3 million being non-admitted. Liabilities were $30.9 million. And as long as the $17.6 million liability remained on its balance sheet, the rehabilitation process was hampered.
When the time finally rolled around when no more losses were expected, Continental would have been an unsecured creditor in the same class as AICPQ holders (or at least that was the stance Deutsche Bank took when it filed its objection to the joke reorganization plan file by Granite Re). Continental's lawyers would most likely have opposed any plan and attempted to obtain a richer payout anyway.
If Granite Re wins on appeal, Continental not only gets to hand over the $11 million but also may have to make up any difference. So, Continental and Granite Re are now out of the way.
"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
