Gefion has 45 days to restore its solvency ratio or faces losing Premium Credit as a finance provider on its policies
Unrated Danish insurer Gefion has been given 45 days to save itself from losing Premium Credit as a finance provider on its policies.
If Gefion can restore its solvency coverage ratio from 105% to 135% in that time, then the restriction will be lifted, according to a letter from Bollington Underwriting to brokers.
Gefion had its solvency ratio slashed to 105% from 130%, after the Danish Financial Supervisory Authority decided that the way Gefion had been calculating the figure was invalid.
The decision was referred to by Premium Credit in a statement on Friday, in which it said the finance provider has “ceased financing insurance premiums where Gefion Insurance A/S is the underlying insurer”.
However, in a message to its brokers in response to the news, Bollington Underwriting, a wholesale broker partnered with Gefion, revealed the Danish carrier would only be removed from Premium Credit’s approved insurer panel in 45 days time.
Premium Credit confirmed to Insurance Times that the 45-day window has been granted to support the placement of business already in progress, and that the window closes in mid-August.
For Bollington Underwriting and Anjuna, the group’s MGA, Premium Credit said it is in consultation with the Bollington leadership to agree a specific exception of 90 days.
In the message to brokers, given by Bollington Underwriting group managing director Chris Patterson, he reassured them that Gefion plans to restore its solvency ratio to 135% within the 45 days.
He added: “As a business we have robust compliance procedures and processes in place to monitor all our capacity providers.
“We have been in regular dialogue with Gefion throughout these developments as well as our reinsurance brokers and A rated quota share/excess of loss reinsurers.
“All parties have been provided with an overview of their business plans and recapitalisation strategy. We have also met with Premium Credit to discuss their decision as they are one of our key funding partners.”
He said Premium Credit has agreed to lift the restriction if Gefion can acheive the target solvency ratio within the timeframe.
And he went on to further ease any broker concerns by reminding brokers of Bollington Underwriting’s panel of insurers, including ‘A’ rated carriers, offering a variety of niche policies.
He added: “With a background of providing strong returns of underwriting profit we continue to develop our product offering and insurer panel, and will shortly be announcing a new range of motor, property and casualty products on ’A’ rated paper.”
A spokesperson for Premium Credit said: “We have a duty of care that includes ensuring we are not lending money that exposes customers, should the worst happen. We continue to monitor the unfolding situation with Gefion.”