RBM takes over near insolvent Prime Insurance
The Reserve Bank of Malawi (RBM) has taken over management of local insurance company, Prime Insurance Limited, after putting the company into administration.
RBM Governor Charles Chuka made the announcement Friday in Lilongwe during a press briefing, saying the central bank was giving the company’s shareholders a month-long period to recapitalise it or risk the firm being declared insolvent.
He said the development follows months of monitoring of the insurance firm’s financial records and negotiations amid reports of failure by the firm to honour claims by clients.
Chuka, speaking just after meeting the company’s board and management to break the news at the central bank headquarters, said the unstable situation at the firm forced the company to struggle to pay claims leading to many clients to petition the regulator to act.
“Just like any other financial institution operating in Malawi, the company has been subject to supervision through on site and off site examination by the Registrar of Financial Institutions.
“The last on site examination of the company was done in February 2016 revealed that the company’s financial condition is seriously impaired with solvency ratio negative 1.8 percent against the regulatory minimum of 20 percent,” Chuka told journalists.
He said delays to make payments to claimants led to court action with several warrants issued against the company and the petition to wind up the company.
He assured the public that under management their claims will still be safe and the operations of the company will continue although offices except the headquarters will now be shut down.
Under the terms of administration, Chuka added that employees will continue to be paid for the whole duration of the period but said once the shareholders have failed to demonstrate they will be able to recapitalise the company, the central bank will kick-start the liquidation process.
Prime Insurance Company was licensed in 1991 to conduct general insurance business but over years grew more into the motor vehicle insurance portfolio.n
