Denmark-based Alpha Insurance has announced it has ceased all underwriting after events surrounding CBL Insurance Limited, one of the firm’s largest reinsurers, were made known to the market.
According to Alpha, the move is a direct consequence of CBL Insurance Limited having been placed into interim liquidation and the changes in its credit ratings by A.M.Best.
The firm said it has ceased all underwriting of new business, including renewals. A day after the decision, Alpha Insurance general assembly also placed the company into solvent liquidation.
“This means that Alpha Insurance from this date will be in run-off,” it said. “The company is solvent, and we, therefore, expect that all present and future obligations will be honoured.”
The company said all claims will be paid and all policies on force will remain so until their contractual expiry.
“We can confirm that Alpha Insurance continues to operate and all policies in force will be served as has been the case up to today,” it added.
On February 23, CBL Insurance was placed into interim liquidation, following an application by the Reserve Bank of New Zealand to the High Court.
A week after the announcement, RBNZ said CBL Insurance breaching its directions prompted the regulator’s move against the insurer. The central bank, in an affidavit, said CBL Insurance made payments of $55 million to overseas companies despite doubts about the insurer’s solvency.
Furthermore, as stated in the affidavit, CBL Insurance paid nearly $42 million to Alpha for reinsurance claims on February 16, even with instructions not to make payments and declined permission from RBNZ.