Email: A Different Point Of View

To whom it may concern:

The information I am about to pass on are the facts as presented to employees at NWIC regarding the current situation and the Liquidation of the company.

On May 13, 2003 an e-mail was sent out to the employees of NWIC stating that effective immediately we were to stop authorizing repairs on certain contracts owned by a company doing business under the name of Pacific Fiduciary Investment Company (PFIC). The reason for this suspension was because this company had not funded the account they were to provide to pay claims out of. PFIC alleged that they had met their obligation to the contracts and that it was up to NWIC to take care of the rest. NWIC was alleging that PFIC had not met their obligation and a "stalemate" began.

PFIC is a company owned by SC&E(Smaart Choice & Encore). SC&E is owned by The Delta Group who is in turn owned by Yamagata Enterprises.

A good portion of the PFIC business came from dealers who no longer sold the Smart Choice policies, dealerships that were on a "watch list" for various reasons (including overcharging warranty companies for repiars to make more money), and vehicles whose milage was over 80,000 miles.

Over the next few weeks we as employees were being told that this situation would be resolved as quickly as possible and that NWIC and PFIC(SC&E/Delta?Yamagata) were in negotiations to reach a resolution. We soon found out that this would not be handles as quickly as they were hoping. Soon the suspension on PFIC claims had spread to include all Delta owned contracts.

As time slowly went by, the failure of PFIC to fund their account started to put a strain on the day to day business of NWIC. Soon there were doubts about other contract companies not adequetely funding their accounts. By the end of May, AM Best had dropped NWIC's rating signaling that NWIC was experiencing financial dificulties. Not long after this, the owners of NWIC had turned to the Monetary Authority of the Caymen Islands (this is where NWIC is domiciled and regulated) for assistance.

On the 6th of June the Monetary Authority and the Grand Court of the Caymen Islands sent representatives of KPMG, an accounting firm, to NWIC to look into the financial situation regarding NWIC and it's dispute with PFIC/SC&E/Delta/Yamagata. Based upon their intial findings the representatives from KPMG(to be referred to as Joint Provisional Liqudators or JPL's) recommended to NWIC management to cease authorizing and paying claims on all contracts that NWIC was the administrator for.

We were told this decision was so that the JPL's could get a better look at the finances of NWIC and all of the contract accounts. On Monday June 9th, 2003 employees were informed that based upon the initial findings by the JPL's, NWIC had been placed into Joint Provisional Liquidation. Durring this time we were told that once this process was completed that we would be back to "normal business" and we would move forward.

The longer that the JPL's were in our offices, the more the employees began to wonder what was actually going on. Through press releases and office memos we soon learned that the JPL's were going to recommend Liquidation of NWIC based upon their findings that NWIC is insolvent and would not be able to continue to operate.

We would soon find out that the basis of these findings were due to poor financial records kept by NWIC. In the coming weeks it was learned that some of the bank accounts had not been reconciled. It was also learned that some claims had been paid out of accounts that they shouldn't have been paid out of and that there was a possibility that money had not been put back into that account.

So here we are now. On August 1, 2003 the Grand Court of the Caymen Islands ruled that NWIC was indeed insolvent and that it would in fact be placed into Liquidation and forced to close it's doors.

Up until now the media has only gave one side of the NWIC story, mainly for the reason that NWIC officials had refused to comment on the situation. I am not defending or supporting anyone or anything here. In my opinion if there is any blame to be placed for this entire situation I would have to say that both parties (NWIC and PFIC/SC&E/Delta/Yamagata) are to blame for a majority of the problems. Each company had it's responsibilities, and both apparently fell short of their obligations.

There are a handfull of dealers out there that I would also include in the list of people partially responsible for this downfall as there are some dealerships out there that care only about making the allmighty dollar, no matter what. These dealers would sell a vehicle service contract on a vehicle that would have over 80,000 miles on it which would in turn end up costing the contract company more money than the price of the contract was sold for. Because of situations like these, as well as those where dealerships felt the need to overbill and oversell repairs on vehicles with service contracts, the contract companies begine to lose money.

While what I have said here might not make the situation better for anyone involved I felt it was necessary to try to fill in some of the holes in the stories that have been circulating in the media and the internet over the last months.