Vermont Collects $205 Million Judgment to Pay Claimants and Creditors of Ambassador Insurance Co.

Peter F. Young, Assistant General Counsel, 802-828-3301
Thu, 10/23/2008

 Montpelier, Vermont—Banking, Insurance, Securities and Health Care Administration (BISHCA), announced today thatVermont has collected $205 million for Vermont-domiciled Ambassador Insurance Companyfrom the accounting firm of PriceWaterhouseCoopers. Commissioner Thabault stated that thesemonies will allow Ambassador policyholders and claimants to receive the insurance proceedsthey were due under Ambassador insurance policies. “As a Department, we’re committed toprotecting the interests of policyholders, and pleased that the years of work in connection withthese receivership proceedings should allow us to make full payment to all policyholders,”Thabault said. The $205 million includes damages and interest awarded in connection with amalpractice lawsuit against the accountants responsible for negligently auditing Ambassador’sfinancial statements.Commissioner Thabault is the court-appointed receiver for Ambassador, and confirmsthese funds will now be used to pay persons insured and owed money by Ambassador. SaidCommissioner Thabault, “Claimants should know that the long wait is nearly over, and that weexpect to be able to fully pay claims by insureds and policyholders, with interest.”Some claimants have been approached by companies offering to buy claims and pay onlya percentage of the money owed instead of the full amount to be received by waiting for the endof the process. While such an assignment is allowed, claimants should be aware that it may notbe in their best interest as the amount offered may not take into account the additional interest tobe paid on approved claims.In the accounting malpractice lawsuit now concluded, Ambassador’s outside accountantswere charged with negligence in connection with audits of Ambassador’s financial statementsthat concealed the insurance company’s true financial weakness and near insolvency fromregulators. A nine week trial in federal court in Newark, NJ, resulted in a jury verdict againstDefendants PriceWaterhouseCoopers and the estate of Arnold Chait, Ambassador’s formerPresident. The 2005 verdict and PriceWaterhouseCooper’s obligation to pay all of the resultantdamages was affirmed on appeal by the U.S.Court of Appeals for the Third Circuit.--30--Paulette J. Thabault, Commissioner of the Vermont Department of