The Central Bank of Ireland has ordered the European arm of troubled New Zealand-based specialist insurer CBL Corporation to stop writing business.
The move comes after shares in the Auckland-based CBL Corporation were suspended on the New Zealand stock market on February 2nd as regulatory authorities concluded that it needed to raise capital to shore up claim reserves in its French construction insurance business, which makes up most of its operations.
CBL has about 12,500 Irish household policies on its books. It also provided cover against insolvency on Ryanair’s travel insurance policy. In a statement, Ryanair said: “Our travel insurance partner, Europ Assist, has commenced a process to source an alternative provider.”
CBL revealed less than two weeks ago that the Central Bank of Ireland had commenced a “supervisory engagement process” in relation to the group’s Irish-regulated unit, CBL Insurance Europe (CBLIE).
It said the Irish regulator had issued a number of directions to CBLIE “to strengthen its capital base, reserves and reinsurance security” and commissioned a report into the group’s French business.
‘Cease writing business’
The Central Bank of Ireland said on Monday that it has "issued a direction" to CBLIE, which operates in a number of European Union markets under rules governing the passporting of financial services, to "cease writing business with immediate effect, until further notice".
CBLIE specialises in construction-related credit and financial surety insurance, professional indemnity insurance, property insurance and travel bonding.
The Irish regulator added that the company “continues to operate and that existing policies continue to remain in force”. It has directed CBLIE to write to and explain the order to its insurance brokers and distribution partners, who, in turn, are asked to inform policyholders.
CBLIE is authorised to write business in Ireland, Belgium, Denmark, France, Italy, Norway, Romania, Spain, Sweden and the UK.
CBL said last week it intended to quit the French construction business, reported to account for more than 60 per cent of its total gross written premiums, after a board-led review that a significant high level of capital was needed to meet estimated future claims, which posed a disproportionate level of risk for the group.
