Insurer CBL fights Central Bank ban on new business
An insurance firm has vowed to fight a Central Bank order that it cease writing new business.
CBL Insurance Europe DAC (CBLIE) has sought legal advice in Europe and has instructed its European legal counsel to request the Central Bank to withdraw this direction, its parent company said.
"Failing this, CBLIE reserves it rights to take any action it deems necessary in order to protect its interests," CBL Corporation Limited said, in an update to the New Zealand stock exchange.
CBL Insurance Europe DAC (CBLIE) underwrites construction-related credit and financial surety insurance, as well as professional indemnity and property insurance, and travel bonding.
It is a wholly-owned subsidiary of CBL Corporation Limited, which is incorporated and domiciled in New Zealand.
In issuing the direction on Monday, the Central Bank said the insurer continues to operate and that existing policies continue to remain in force.
A spokeswoman for the regulator said CBLIE has 12,500 policies in Ireland. The development comes just over a week after the Central Bank directed CBLIE to strengthen its capital base, reserves, and reinsurance security, given its exposure to its parent company, CBL Corporation, headed up by group CEO Peter Harris.
It said earlier this month that it expected to post a full-year after-tax 2017 loss.
The company said it needed to boost reserves to shore up its French construction insurance business.
"CBL has previously announced to the market, on 14 February 2018, that it has decided to exit its long tail French Construction Business," the CBL statement said.
"As part of this decision CBLIE would cease writing new French Construction Business from April 2018, with all French Construction Business renewals ceasing from June 2018, subject to regulatory approval."
In a statement on Monday, the Central Bank said it "issued a direction to CBLIE instructing it to cease writing business with immediate effect, until further notice".
"CBLIE continues to operate and existing policies continue to remain in force," the regulator said.
"The Central Bank has required CBLIE to write to all appointed insurance brokers and distribution partners to inform them of the direction."