Gibraltar's financial regulator has begun a "major investigation" into Enterprise Insurance, which collapsed in July affecting 14,000 Irish policyholders, amid suspicions it consistently misled authorities on its financial health.
The move on Wednesday came as it emerged that the company has a £96 million (€107 million) hole in its balance sheet, up from an estimated range between £11 million and £18 million outlined before Gibraltar’s supreme court three months ago.
"The extent of the financial collapse of Enterprise is unprecedented," the Gibraltar Financial Services Commission said in a statement on Wednesday. "Our investigation will focus on the apparent failure of the board to adequately govern the company and to report the company's true financial position to the commission.
“The extent of this insolvency raises major questions about the competency and integrity of the Enterprise board.”
Directors’ positions
The regulator has called on the directors, led by chief executive Andrew Flowers and chairman Nicholas Cruz, to stand down from positions they hold in other regulated companies as the investigation is ongoing. None of the eight directors, mainly UK citizens, listed on the company’s website responded to attempts to gain comment.
Separately, on Wednesday Gibraltar’s supreme court appointed a liquidator to Enterprise. From midnight on October 26th, all motor policies written by the insolvent company will cease to be effective, meaning drivers relying on Enterprise coverage will considered to be driving without insurance, the financial regulator said in a statement on its website.
As of Wednesday, some 600 Irish policies remained live, according to a spokesman for Wrightway, the Wexford-based underwriting agency that wrote business in Ireland through brokers on Enterprise’s behalf.
The Central Bank of Ireland said it “strongly recommends that affected consumers immediately contact their insurance broker or an insurer directly to seek an alternative insurance cover.”
Other countries
The commission said the liquidator, Freddie White of Grant Thornton (Gibraltar), will be in contact with compensation schemes and authorities in the various countries in which Enterprise wrote insurance. Before its collapse, the insurer also operated in the UK, France, Italy, Greece and Norway.
In July, when he was provisional liquidator of Enterprise Insurance, Mr White told The Irish Times that the company had 255 Irish claims on its books as of June, with an estimated cost of €6.2 million. Mr White wasn't available for comment on Wednesday. It is understood that the liquidator's report he presented to Gibraltar's top court on Wednesday will be published in the coming weeks.
The developments in Gibraltar come a day after the Irish Supreme Court reserved judgment on a case that will likely decide what body carries the cost of claims against failed insurers.
The court heard an appeal this week by the Motor Insurers Bureau of Ireland against a Court of Appeal decision earlier this year, which said the bureau must foot the bill for Malta-registered Setanta Insurance in 2014, which could run to about €90 million.
