THE insurance and Pension Commission (IPEC) has directed Excellence Insurance Company to recapitalise their business or risk losing its licence as it emerged that the company had failed to meet the minimum regulatory requirement of $750 000 as of September 30, 2013.
According to IPEC third quarter report for non-life insurance, the capital position for Excellence Insurance Company decreased to $171 407 as at September 30, 2013 following the withdrawal of capital after one shareholder exited the company.
In an interview with NewsDay, IPEC commissioner Manett Mpofu said the regulator has been engaging Excellence Insurance Company to recapitalise its business in line with the minimum regulatory requirements.
“We are talking to them to recapitalise, if they fail we will deal with them in terms of section 24 of the Insurance Act,” Mpofu said.
Mpofu said the negotiating period would depend on the kind of responses given by Excellence Insurance Company.
In the third quarter report for the period ending September 30, 2013, IPEC reported that 12 out of 23 operating non-life insurance companies were already compliant with the minimum capital requirement of $1,5 million effective June30 2013.
“The industry average solvency margin for non-life insurers was 60,43% as at September 30 2013 reflecting deterioration from 61,12% reported as at June 30, 2013.
“The industry average solvency margin which was above the prudential minimum of 25% indicates that, on average, most insurers were retaining business volumes which are in line with their capital positions,” reads the report in part.
The insurance regulator said Altfin Insurance Company was the only non-life insurance company that reported a solvency margin which was not compliant with the prudential minimum of 25% stipulated in the Insurance Act.
During the period under review Altfin Insurance solvency margin deteriorated from 25,98% as at March 31, 2013 to 23,27% as at June 30, 2013 and 18,84% as at September 30 2013.
“Although the institution has since reduced the volume of business written in line with its capital position, it still faces challenges given that its capital is supported by an investment which amounted to $1,10million as at September 30 2013 placed with Interfin Banking Corporation which is under curatorship,” read the report.
“Altfin Insurance Company’s capital is therefore encumbered.”
According to the report, all non-life reinsurers were compliant with the minimum capital requirement of $750 000 as at September 30, 2013.