Liquidators of the Danish insurer files for bankruptcy and policyholders are advised to seek new cover

Unrated Alpha Insurance A/S policyholders have been left scrambling for new cover after the insurer declared its bankruptcy.

Customers had until yesterday before their cover was axed. 

The Danish regulator is urging customers to find new cover as quickly as possible after Alpha filed a petition for bankruptcy this morning.

Alpha had a number of UK motor policyholders on its books. 

Alpha had motor fleet policies in the UK on its books through managing general agent Lima Agency. Its website currently states Alpha as a partner. 

No one from Alpha was immediatley available for comment. 

Alpha’s reinsurance issues 

Alpha fell into trouble after its reinsurance partner CBL Insurance Limited suffered its own solvency problems. 

The company officially stated that the bankruptcy proceedings started because it decided to terminate all new subscriptions and renewals of insurance contracts as a result of the company’s primary reinsurance company, CBL Insurance Limited.

The Danish compensation fund for failed insurers will help pay Alpha claims. 

However, the Guarantee Fund will only cover claims for Alpha which were filed just before the bankruptcy, and until four weeks after (5 June 2018).

Notification of claims that are not covered by the fund must go directly to the managers of Alpha Insurance.

CBL Insurance

New Zeland High Court documents reveal that CBL Insurance was the quota share reinsurer for Alpha on French construction.

But CBL was massively under-reserving for French construction surety. When the Danish regulator found this out, it ordered Alpha last July to boost reserves.

The Reserve Bank of New Zealand’s head of prudential supervision Toby Fiennes said: ”Another of its cedents, Alpha Insurance of Denmark, which amongst other lines of business reinsured by CBLI had under-written French construction insurance was required by regulators to increase its claims provision substantially. 

“These requirements were imposed amid concerns about Alpha’s exposure to the French construction business, reinsured by CBLI.”

After CBL went into administration in February, Alpha, as a result, filed for voluntary liquidation less than two weeks later.

Alpha has said that the curator of the bankruptcy estate, attorney-at-law Boris Frederiksen, will contact all policyholders in Alpha Insurance A/S to inform and guide them on how to act.