CBL under fire from regulator for payments to unrated Alpha Insurance A/S
Collapsing insurer CBL made payments to unrated Alpha Insurance A/S despite not having regulatory approval.
CBLI paid $42m (NZ), or 25 million euro to Alpha Insurance of Denmark for reinsurance claims on February 16, despite the bank declining permission and ordering it not to make the payment, an affidavit from the Reserve Bank of New Zealand reveals.
This forced the bank, which acts as the insurance regulator in New Zeland, to put CBL Insurance into interim liquidation as it feared the troubled business could make more unauthorised payments.
The payments, which included with other overseas transfers totalled $55m ’may provide some creditors of CBL Insurance with an advantage over other creditors,’ according to bank officials.
Problems are far worse at its partner CBL Insurance, which is on the brink of collapse after it emerged it has a $100m(NZ) reserves hole in the business.
CBL writes business across the UK, Ireland and Europe in surety, professional indemnity, household and protection.
Alpha has a network of UK brokers and MGAs, writing motor fleet and income protection.