Herbert Insurance's books 'questionable', receiver

Michael Stiassny Photo / Sarah Ivey

Herbert Insurance Group, the boutique insurer under scrutiny from the Serious Fraud Office, has "questionable" books, according to its receivers.

In their first report on Herbert, Michael Stiassny and Brendon Gibson of KordaMentha said the company had been making losses for some time before it was tipped into receivership. Still, the assessment was based on limited information.

"The integrity of the company's books and records is questionable due to irregularities around the accuracy of information" the report said.

Similarly, Herbert Securities, an associated company that provided finance to Herbert Insurance's customers, has questionable records, the receivers said in a separate report.

Herbert Insurance guaranteed Herbert Securities.

Herbert Securities lists Paul Webb, former star of reality TV show Dragon's Den, and Ellis Gould Lawyers partner John Radley as sole shareholders.

They replaced Herbert Insurance principal Grant Herbert in September 2007, according to Companies Office documents.

Lender ASB Bank, who called in the receiver, is owed $780,000 and the Inland Revenue Department has lodged a preferential claim of $314,000. Unsecured creditors are probably owed some $200,000.

The receiver doubts there will be any funds available to pay the IRD or unsecured debts.

On March 17, rival Aon New Zealand Group took over Herbert Insurance's client base of some 4,500 people. The value of the retained base will be determined 12 months after settlement, with no consideration paid until March next year.

The Serious Fraud Office launched an investigation into Herbert Insurance after receiving complaints of a short-fall in its insurance broking client account.