It says the Gibraltan regulator’s notice was misleading

Gibraltar-based broker Monitor Insurance Services, which placed solicitors’ professional indemnity (PI) insurance with failed insurer Lemma Europe, has responded to the recent notice by the Gibraltan regulator.

In a notice on Monday, the Financial Services Commission (FSC) said it required the broker to transfer its intermediary business and subsequently wind up the business, as part of a settlement agreement.

Lemma Europe was placed into liquidation in September 2012 by the Supreme Court of Gibraltar after its shareholders failed to inject capital that would have allowed it to meet solvency margin requirements. The regulator subsequently launched an investigation into why the insurer failed.

As part of its investigation the FSC looked at documents and information provided to Lemma Europe by Monitor between 1 October 2009 and 30 September 2011.

The FSC said Monitor managers John Levett and Nicholas Rowe knew the information their broker provided to Lemma was incomplete because it did not include the full amount of insurance premiums written by the company.

Right of reply

In a statement released yesterday, the broker stressed that the information it passed to Lemma Europe was in the format the insurer required it.

“There is no finding that the documents were false or misleading. Monitor provided evidence to the FSC that this document was prepared in the format stipulated by the management of Lemma who were principal of the delegated authority,” it said.

“The directors are saddened by the outcome and make the following observations on the circumstances of the settlement.

“The reference to Lemma Europe Insurance Company Limited in the subject matter of the notice is misleading. The FSC enquiry into the conduct of Levett and Rowe was in relation to Monitor, which acted as agent of Lemma in relation to a delegated authority. Levett and Rowe held no employment or executive management function within Lemma.

“For the absence of doubt Monitor and the directors confirm that all risks were notified to Lemma and all gross premiums reported and remitted in full within the terms of the delegated authority or as directly instructed by Lemma from time to time. Monitor fully co-operated with the FSC enquiry.”

Levett and Rowe rejected the FSC’s finding that they failed to meet the standards required by the Financial Services Act.

As part of the settlement they agreed, without admitting liability, not to hold any future positions with any FSC licensed body for two-and-a-half years.

Monitor also pointed out that it had stopped accepting new business in September 2013, before it entered into the settlement, and that the majority of business had already been transferred.

The FSC has closed its enquiry without any finding that Levett and Rowe were not fit and proper, and stressed that they fully cooperated with the enquiry.

As a result of its investigation the FSC declared Lemma Europe managing director James Trusselle not fit and proper to be a director, and it issued a notice to parent company Lemma Ukraine president Sergey Chernyshov that he should cease to be a shareholder and controller of the subsidiary.