October 25, 2010 Insurance

Montréal – At the request of the Autorité des marchés financiers (AMF), Judge Louis Crête of the Québec Superior Court ordered the appointment on October 8, 2010 of Claude Gilbert of the firm PricewaterhouseCoopers as receiver over the property of Services en sécurité aquatique inc., which also does business as Water Safety Services Inc. (WSS), and International Water Safety Foundation (IWSF).

On October 14, 2010, Québec Superior Court Judge Fraiberg upheld the appointment of Claude Gilbert as receiver and:

• ordered WSS, IWSF, and their directors or officers, in particular, Alexandre Beaudoin Bonotto, Todd Côté and Ron Miller, to repatriate all funds and property of WSS and IWSF, as well as all funds and property held on behalf of third parties, and to remit them to the receiver;
• requested that the receiver take any necessary measures to ensure that illicit activities are ceased;
• requested that any Internet site operated by WSS and IWSF in connection with their business operations be discontinued;
• requested that the receiver contact the “insureds” to inform them that their insurance policies issued by IWSF and/or WSS are part of a judicial discussion regarding their validity and that the “insureds” may need to take out new policies.

As well, on October 13, 2010, the AMF launched penal proceedings against WSS, IWSF and Alexandre Beaudoin Bonotto, President of WSS, for offences committed under An Act respecting insurance and An Act respecting the distribution of financial products and service, in respect of which the AMF is seeking substantial fines.

A complex structure

The AMF investigation showed that IWSF, a company incorporated in England, was issuing insurance certificates to U.S. clients through WSS, a company constituted in Québec that is neither licensed nor registered as an insurer, firm or claims adjuster in Québec. The master policy issued by WSS and IWSF was allegedly underwritten by North American Marine General Insurance Company (NAMGIC), a Panamanian insurer. According to the AMF investigation, this insurer does not exist.

As a result of its investigation, the AMF was able to conclude that WSS’s and IWSF’s clientele consisted exclusively of U.S. clients. Regulators in at least 11 U.S. states issued cease and desist orders against IWSF and WSS prohibiting them from transacting insurance business in their respective jurisdictions.

For further information, we invite you to consult the receiver’s website at www.pwc.com/ca/en/car/iwsf/index.jhtml.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

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