The Insurance Pension Commission (Ipec) is working on modalities to reimburse, SFG Insurance, policyholders (in collaboration with the Ministry of Finance) an official said.
SFG Insurance Company, a subsidiary of Zimre Holdings Ltd, closed after recording a huge negative solvency ratio as its capital base fell far short of minimum thresholds required for sound operations.
Togarepi Pupurai, Ipec head of prudential supervision said the commission was working in conjuction with the Ministry of Finance to appoint a liquidator so as to compensate SFG policy- holders and creditors within a month.
A report by Ipec last year revealed that SFG’s capital stood at a negative US$1,13 million at the end of the year, while shareholders’ equity was US$1,12 million.
Financial and capital markets deputy director in the Ministry of Finance, Mary Takavarasha, told an Ipec seminar recently that a robust regulatory framework was being expedient with the aim of revamping the sector’s financial stability.
This would be by trying to reduce insurer’s failures as well as ensuring orderly exit from the market when companies fail.
Pupurai said the regulator would be guided by the due processes of the law under the Companies Act to compensate all the creditors.
“We have advised the minister of Finance, who will then on our behalf, within a month, appoint the liquidator. We will make sure that we have done much of the processes and make sure policyholders and other creditors get their money. It may not be enough, but we will make sure everyone gets something, ” said Pupurai.
“There is low liquidity in the market. They (SFG) still have properties but you cannot liquidate property, but we have taken a stand to protect shareholders and policyholders.”
Last year Ipec raised minimum capital levels for short-term insurance companies to US$1,5 million from US$300 000, a figure most players are struggling to raise.