Tuesday 27th February 2018
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The Central Bank of Ireland sought a court order to appoint provisional administrators to CBL Corp's European unit, following similar action from New Zealand's prudential supervisor, to avoid a "disorderly failure" of the insurer.
KPMG's Kieran Wallace was appointed provisional administrator to CBL Insurance Europe dac by the High Court on application from Ireland's central bank, which the regulator said in a statement was to protect the insurer's policyholders. The regulator had been in talks with CBL's European unit for months to fix what it viewed as a number of breaches, including a weak financial position, and the insurer's inability to address those issues prompted the central bank to seek the order.
"The Central Bank has made this application as it has formed the view that CBLIE is in breach of a number of regulatory requirements and is in a distressed financial position," the bank said. "In the absence of taking this action, it is the Central Bank’s view that there could be a disorderly failure of CBLIE."
The Irish central bank action comes after the Reserve Bank of New Zealand's successful High Court application to appoint interim liquidators to CBL Insurance on Friday to maintain the assets of the Kiwi insurer, followed quickly by CBL Corp's voluntary administration to preserve value for stakeholders.
The Central Bank of Ireland said deputy governor Ed Sibley made the decision to seek the court order, saying the CBL unit "failed to make adequate provision for its debts, including contingent and prospective liabilities," had been run in a way that jeopardised the rights of policyholders," and that it was "unable to comply with its regulatory requirements in a material respect."
Earlier this month, the Irish regulator had instructed CBL's European unit to stop writing new business immediately, something the New Zealand insurer opposed, while New Zealand's Reserve Bank had been reviewing the Kiwi insurer to assess the adequacy of its reserving for a French construction business, and set the CBL unit’s minimum solvency at 170 percent and required it to consult on any non-business as usual transactions of more than $5 million.
Earlier this month CBL Corp said it was hiring advisers to sell the French construction insurance division and had triggered legal rights against the vendors who sold the Kiwi company the unit.
CBL’s stock has been suspended from trading on the NZX as the stock market operator tries to work out whether it’s kept the market informed of material information and met continuous disclosure obligations, which has also attracted engagement from the Financial Markets Authority. The shares last traded at $3.17 before being suspended, more than twice the $1.55 price the shares were sold at in an initial public offering in late 2015.
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