STEPHEN THWAITES and MARK THWAITES In response to a recent Sunday Business story in which former chief operating officer of the Dyoll Group, Mark Thwaites claimed that the Dyoll's chief financial officer overstated reinsurance recovery, the Dyoll Board has contradicted Mr. Thwaites' allegations. Below is the press announcement released yesterday.
THE BOARD of Dyoll Group Limited wishes to address various comments recently made in the press concerning the fact that the Dyoll Group board was not furnished with full information concerning claims exposure on the Dyoll Cayman property portfolio. The Dyoll Group board, in a previous release, made it plain that it had not been kept properly informed by executive management of the level of exposure. In view of recent press comments, the Dyoll Group board now feels obliged to be more specific.
REINSURANCE TREATIES
In view of the significance of the claims caused by Hurricane Ivan, the board of Dyoll Group required Mr. Stephen Thwaites (the chief executive officer of Dyoll Group Limited and Dyoll Insurance Company Limited at the time) and Mr. Mark Thwaites (the chief operating officer of Dyoll Insurance at the time), to keep it constantly updated as to potential liability on the property portfolio in Cayman.
On November 24, 2004, Stephen Thwaites reported to the Dyoll Group board that total anticipated claims from Cayman would be covered by various reinsurance treaties, including Dyoll Insur-ance's Quota Share Treaty with AON Re, a major global reinsurance company. He said:
"From a review of the latest property claims, it was anticipated that the losses would not exceed the cover provided under the treaty for same."
NO MENTION
He made no mention of the event limit under the treaty, which precluded recovery from reinsurers of losses in excess of US$36,000,000.
On December 16, 2004, Mark Thwaites reported to the Dyoll Group board on anticipated claims from Cayman and made no mention of the event limit nor any adverse financial exposure for Dyoll Insurance as a result of exceeding the event limit.
In discussions on January 31, 2005, the senior risk officer of Dyoll Insurance, Mr. Joe Holness, informed the chairman of the Dyoll Group board that Dyoll Insurance might face adverse exposure on its Cayman property portfolio because the event limit on the Quota Share Treaty would be substantially exceeded.
NEW INFORMATION
This new information was communicated to the chief financial officer of Dyoll Insurance, Mrs. Debbie Anne Hyde, who was preparing for filing with the Financial Services Commission, the required quarterly accounts ending December 31, 2004 (as required under the Insurance Act). As a consequence, the accounts of Dyoll Insurance were adjusted to reflect the new information and presented to the FSC on January 31, 2005.
The matter was investigated, and the following facts discovered:
(i) Ever since the hurricane hit Cayman on September 12, 2004, Executives from AON Re had been in constant (almost daily) dialogue with Stephen and Mark Thwaites concerning the level of potential losses in Cayman, and the distinct possibility that the event limit of US$36,000,000 on the Dyoll Insurance Quota Share Treaty would be exceeded, and that Dyoll Insurance would be liable for the balance of claims arising out of the Caymanian property portfolio;
(ii) Mr. Holness wrote to Stephen and Mark Thwaites on November 22, advising them of the same fact. He projected a US$7,190,000 excess over the US$36,000,000 event limit.
It is regrettable that, having been consistently advised by AON Re, and specifically advised in writing by Mr. Holness on November 22, 2004 that the Quota Share Treaty event limit would be likely to be exceeded, neither Stephen nor Mark Thwaites advised the CFO or the board of this fact. Instead, Mr. Stephen Thwaites formally reported to the board on November 24, 2004 that it was anticipated that the
losses would not exceed reinsurance cover. Additionally, Mr. Thwaites subsequently signed off on the in-house management accounts and financial projections ending December 31, 2004, neither of which reflected the exposure above the event limit on the property portfolio.
The present Boards of Dyoll Group Limited and Dyoll Insurance Company Limited are new Boards, which took over only weeks before hurricane Ivan, and inherited an insurance portfolio and reinsurance contracts and structures, which had previously been put in place while Stephen and Mark Thwaites were Executive Officers of Dyoll Insurance. The Dyoll Group Board relied entirely upon Stephen and Mark Thwaites in all technical matters relating to insurance and reinsurance.
As Dyoll Group was not aware of the true position of the losses suffered by Dyoll Insurance, they were unable to address Dyoll's capital requirements, so as to safeguard the interests of policyholders, and the future of Dyoll Group and Dyoll Insurance Company.
Both Stephen Thwaites and Mark Thwaites resigned on 21st February 2005.
The Board continues to have full confidence in its Chief Financial Officer, Mrs. Debbie Anne Hyde, who, like the Board, relied upon the technical expertise of the Chief Executive Officer and the Chief Operating Officer.
