The Central Bank of Liberia (CBL) has placed five insurance companies under provisional administration.
The companies, according to CBL assessments, have significant capital deficits and have consistently fallen below the capital requirements for licensed insurance companies since the first quarter of 2017.
The CBL named the affected insurance companies as African Insurance Corporation of Liberia (AICOL), Capital Express Assurance Company (CEAC), Continental General & Life Insurance Corporation (CGLIC), Family Dollar Universal Insurance Services Inc. (FDUIS), and Global Trust Assurance Company (GTAC).
A statement published on the CBL website pointed out that CBL’s action is pursuant to the authority vested in it by the Insurance Act of 2013 and consistent with Sections 10.10 and 10.12 thereof.
“The CBL’s assessments of the capital positions of these five companies for the period ended March 2018, show that the companies have significant capital deficits and have consistently fallen below the capital requirements for licensed insurance companies since the first quarter of 2017. The Provisional Administrators (PAs) placed in these institutions are empowered to take all necessary actions in preserving the business/assets of the companies; and to protect the interests of the policyholders. Actions on behalf of, or for the account of the above-mentioned companies that occur without the prior approval of the PAs after June 15, 2018, shall be void and of no effect,” the statement further said.
CBL further asserted that ALL POLICYHOLDERS and other customers of the aforementioned companies may make inquiries directly to the PAs about their contracts/transactions with the above-listed companies. Notices containing information of the PAs are available at the main offices of the five insurance companies.
CBL assures the General Public that the aforementioned actions are in the best interest of the public and are aimed at promoting the safety and soundness of the Insurance Industry and the interests of the policyholders.
“ Our action will preserve the business and the assets of these troubled insurance companies and will protect the interests of policyholders or other customers of these insurers,” CBL pointed out.
It added that the reform of the insurance sector remains a key priority of the CBL.
“The CBL believes that a vibrant insurance industry can significantly contribute to job creation and sustainable economic growth and development, without unnecessary risks to policyholders, assuring the average Liberian insured that he or she will be indemnified by the insurance company that has taken their premium in the event of the occurrence of any covered contingency. As the CBL intensified its efforts for capital compliance, in the first four months of 2018 alone, the insurance industry witnessed an infusion of additional capital of about US$5.0 million. The new resources, along with changes in the management and shareholding of some companies, coupled with potential mergers in the industry, will strengthen the industry in meeting the vast needs of the economy.”
Going forward, the CBL shall enhance market discipline and transparency in the industry by among other things, requiring the periodic publication of the financial statements of insurance companies including disclosure of other key information that are necessary to aid decision making of the public.
The CBL shall continue to encourage Mergers and Acquisition (M&A) as an option in further strengthening the insurance sector. To this end, the CBL is prepared to provide technical support to companies that demonstrate acceptance of pursuing M&A arrangements, said the statement.