The Reserve Bank of New Zealand welcomes placement of CBL Insurance Ltd into liquidation, without the need for a contested hearing.
At a hearing in Auckland today, the High Court appointed Kare Johnstone and Andrew Grenfell, partners of McGrathNicol, as liquidators of CBL Insurance Ltd.
The Reserve Bank applied for the interim liquidation of CBL Insurance in February. Under the Insurance (Prudential Supervision) Act (the Act), the Reserve Bank is the prudential supervisor of insurers carrying on business in New Zealand, including CBL Insurance.
Deputy Governor and Head of Financial Stability Geoff Bascand said the Reserve Bank’s application for liquidation was taken in the public interest and for the purposes of the Act, based on CBL Insurance’s failure to meet solvency conditions, breaches of direction and ongoing misreporting to the Reserve Bank.
“The Reserve Bank followed a careful and rigorous process leading up to the interim liquidation, appointing independent experts as investigators. This took time because of the need for fairness to the company, as well as the complexity of CBL Insurance’s overseas business. This was compounded by CBL Insurance’s poor quality data.”
“Opposition from CBL Insurance’s directors and from the shareholder caused significant delay to the full liquidation hearing. Once major creditors of CBL Insurance failed to come forward with support for an alternative restructuring proposal, then the liquidation outcome became inevitable. We are pleased a contested trial was unnecessary.”
“CBL Insurance’s demise is a complex multi-faceted event involving many parties both in New Zealand and offshore. There will be important lessons to be considered by all parties,” Mr Bascand said.
The Reserve Bank has commissioned a thorough independent review of the CBL Insurance case to identify lessons for itself and the insurance regulatory regime. The review is being conducted by John Trowbridge and Mary Scholtens QC and will cover the period from CBL Insurance’s licensing in 2013 through to the interim liquidation. Key findings from the independent review will be made public next year.