CBL Insurance chronology
The Reserve Bank issued a full insurance licence to CBL Insurance Limited (CBLI) in September 2013. The parent company, CBL Corporation, listed on the NZX and ASX in October 2015.
CBL Insurance Chronology
The Insurance (Prudential Supervision) Act was passed in September 2010, requiring all insurers to be licensed to carry on business in New Zealand. The Reserve Bank became prudential regulator of the insurance sector. The Reserve Bank issued a full insurance licence to CBL Insurance Limited (CBLI) in September 2013 and CBLI’s parent company, CBL Corporation, listed on the NZX and ASX in October 2015.
In mid-2017, European insurers that were heavily reliant on reinsurance from CBLI started running into difficulties with European insurance regulators, due to not having enough money in reserves. It followed that CBLI’s reserves might also be inadequate. The Reserve Bank sought an explanation from CBLI. Its response was to criticise the analysis relied on by the European insurance regulators.
In July 2017 the Reserve Bank directed CBLI to maintain solvency of at least 170% of the standard minimum. In August 2017 the Reserve Bank appointed investigators to look into CBLI’s European business and whether its reserves were adequate. CBLI was not able comply with the solvency direction and in late 2017, to avoid deterioration of CBLI’s situation, the Reserve Bank directed CBLI to not make payments of more than $5 million without consulting the Reserve Bank.
In February 2018 CBLI asked the Reserve Bank to allow it to disclose the directions and investigation, which the Reserve Bank immediately agreed to do. CBL Corporation announced losses and disclosed that regulators in Europe and New Zealand were investigating and closely supervising its insurance activities. Both the NZX and ASX suspended trading in CBL Corporation shares.
In February 2018, the Reserve Bank became aware that CBLI had made payments to offshore counterparties, in breach of the regulatory directions. At the same time, its appointed actuary confirmed that CBLI’s solvency ratio was below 100%.
On the Reserve Bank’s application, the High Court appointed interim liquidators, whose duty was to preserve the assets of the company.
CBLI’s liabilities as at 30 June 2017 were estimated by the investigators to be understated by $289 million. On this basis, CBLI was clearly balance sheet insolvent, as well as being a long way below regulatory minimum solvency standards. Other information came to light during the course of the interim liquidation that highlighted problems with the way CBLI was run and its financial position.
On 12 November 2018, the High Court appointed permanent liquidators to CBLI.
- 14 Feb 2012
- CBL Insurance Limited (CBLI) granted a provisional insurance licence under the Insurance (Prudential Supervision) Act (IPSA).
- 4 Sep 2013
- CBLI granted a full insurance licence under IPSA.
- 13 Oct 2015
- CBL Corporation Ltd was listed on the New Zealand and Australian stock exchanges (NZX and ASX).
- 21 June 2016
- Meeting with CBLI in which the Reserve Bank expressed concerns about reserving levels
- June 2017
- A draft PWC (UK) report commissioned by the regulator of Gibraltar-based Elite Insurance (Elite) identified material under-reserving by Elite. This raised questions about the adequacy of CBLI’s reserving for its reinsurance of Elite.
- 14 Jun 2017
- The Reserve Bank sought information from CBLI about its French business, as at 31 December 2016; and a description of any other insurance or reinsurance business of CBL for which Elite or Alpha is either cedant or reinsurer.
- 23 Jun 2017
- The Central Bank of Ireland issued directions to CBL Insurance Europe (CBLIE).
- Jul 2017
- CBLI provided the Reserve Bank and Central Bank of Ireland with information relating to the reserves of its French business.
- Jul 2017
- Alpha Insurance Limited (Alpha) required by its regulator to substantially increase its provisions for claims. CBLIE was directed by Central Bank of Ireland to withhold payment of reinsurance premiums from CBLI.
- 5 Jul 2017
- Elite goes into solvent run-off. PWC (UK)’s report notes that Elite’s financial position is heavily dependent on its reinsurance by CBLI.
- 25 Jul 2017
- The Reserve Bank directed CBL to maintain a solvency ratio of 170%. At the time, CBLI was reporting a 179% solvency ratio. The Reserve Bank directed CBLI to not enter into any transaction or series of transactions without the Reserve Bank’s permission that provide new or increased levels of financial support to any insurer or reinsurer that was not currently owned by CBL Corporation..
- 21 Aug 2017
- The Reserve Bank appointed McGrathNicol to investigate the financial position of CBLI, and directed CBLI to maintain a solvency margin of 170%.
- 5 Sept 2017
- The Reserve Bank appointed Finity Consulting Pty Ltd (a trans-Tasman actuarial firm) and Milliman (a global actuarial firm) as actuarial experts to report on CBLI’s reserve adequacy and assist the McGrathNichol investigation.
- 17 Sept 2017
- CBLI requested permission to increase its reinsurance of Elite from 80% to 100% in respect of all past business.
- 26 Sept 2017
- The Reserve Bank declined CBLI’s request to increase its reinsurance of Elite.
- 29 Sept 2017
- CBLI’s half-yearly solvency return shows a solvency ratio of 132% as at 30 June 2017.
- 14 Nov 2017
- The Reserve Bank is notified that CBL group is investigating restructuring options and a potential balance sheet reinsurance protection proposal for CBLI.
- 15 Nov 2017
- CBLI and its appointed actuary inform the Reserve Bank that CBLI was not likely to maintain its solvency margin of 170% at 31 December 2017.
- 22 Nov 2017
- The Reserve Bank directed that prior to entering any transaction or series of related transactions involving payment or transfer of assets in excess of NZ$5 million, CBLI and/or its parent company CBL Corporation Limited must consult with the Reserve Bank about its circumstances and about the transaction and any other actions or proposed actions it intends to take in respect of resolving its difficulties.
- 3 Jan 2018
- CBL announced that its subsidiary Securities and Financial Solutions Europe (SFS) had been fined €5,000 by the Luxembourg regulator, after it determined that SFS had been operating outside aspects of its authority as an insurance agent.
- 2 Feb 2018
- Upon request from CBLI, the Reserve Bank permitted CBLI to disclose the Reserve Bank’s directions and the appointment of McGrathNichol, Finity and Milliman as investigators.
- 2 Feb 2018
- The NZX and ASX halted trading of CBL Corporation Ltd shares.
- 5-6 Feb 2018
- CBL Corporation announced to NZX and ASX a forecast loss of NZ$75-85 million after tax and arising from an increase in reserves for its French business of $100 million, and a $44 million write-off of receivables through SFS. CBLI stated that a capital raising would soon be proposed. .
- 7 Feb 2018
- CBLI informed the market that: the Central Bank of Ireland (CBI) had started a supervisory engagement process in respect of CBLIE; the Reserve Bank of NZ had appointed independent investigators, imposed restrictions on trading and set a solvency ratio in 2017; and A.M. Best had downgraded the issuer credit rating of CBL from bbb- to bb+, CBLI’s financial strength from A- to B++ and long term issuer credit rating from a- to bbb+.
- 8 Feb 2018
- The NZX suspended trading of CBL Corporation shares pending announcement of 2017 financial results.
- 12 Feb 2018
- The Reserve Bank directed CBLI not to make a payment of €25 million to Alpha which it had proposed, or to enter into any other transaction or series of related transactions involving payment or transfer of assets of NZ$1 million or more to Alpha or any other companies in the Alpha Group, without the written permission of the Reserve Bank.
- 12 Feb 2018
- CBL Corporation asked ASX to suspend trading in its securities.
- 14 Feb 2018
- CBL announced that it would withdraw from its French construction business in April 2018, and that it had recourse against the vendors of SFS on its balance sheet for around NZ$40 million.
- 14-15 Feb 2018
- CBLI made three separate payments to United Specialty Insurance Company (USA) just under NZ$5 million, without informing or consulting the Reserve Bank.
- 16 Feb 2018
- CBLI made a payment of €25 million to Alpha.
- 17 Feb 2018
- The Finity and Milliman actuaries issued their draft reports concluding that CBLI had a shortfall of NZ$294 million from the Reserve Bank imposed solvency standards.
- 19 Feb 2018
- The Central Bank of Ireland directed CBLIE to cease underwriting new business with immediate effect until it had resolved its issues to the Central Bank of Ireland’s satisfaction. CBLIE announced it was seeking legal advice to challenge the regulator’s directive.
- 20-21 Feb 2018
- CBLI verbally advised the Reserve Bank that CBLI’s solvency ratio was below 100%.
- 21 Feb 2018
- The Reserve Bank sought information from CBLI about any payment or transfer of assets made on or after 1 February 2018 for NZ$1 million or more by either CBLI, CBL Corporation or any of its subsidiaries.
- CBLI reported that from 14-20 February it had made various payments totalling around NZ$55 million to Alpha and United Specialty.
- 23 Feb 2018
- The High Court appointed interim liquidators to CBLI on the grounds that CBLI was failing to maintain its solvency margin and breached the 12 February 2018 direction not to make a payment of €25 million to Alpha.
- 12 Nov 2018
- The High Court appointed liquidators to CBLI.