Enterprise Insurance Company to cease contracts following insolvency

The Gibraltar Financial Services Commission (GFSC) has directed Enterprise Insurance Company, under section 105 of the Financial Services (Insurance Companies) Act, to cease writing any new insurance business or contracts after the company was declared insolvent.

GFSC has also issued certain directions under Section 100 of the Financial Services (Insurance Companies) Act that prohibits Enterprise from making any payments unless previously authorised by the Commission, in order to protect the assets of the company.

GFSC has said it is now taking steps to issue winding up proceedings with the cooperation of Enterprise. It is the intention to issue an application for the appointment of a provisional liquidator.

This action has been taken by GFSC after it was told by Enterprise that it was insolvent and has not been able to secure additional funding.

GFSC has said it is taking appropriate steps to protect policyholders, and is notifying the European Insurance and Occupational Pensions Authority (EIOPA), and the relevant financial services regulators and compensation schemes in France, Greece, Italy, Norway, Ireland and the UK, where Enterprise has written business.

Prior to this decision, the commission had put Enterprise under close supervision due to concerns about its financial position.

According to GFSC, in recent months it had been seeking assurance from Enterprise about its financial position, and has required the company to provide independent verification of important items. Enterprise has been working with its independent advisers to provide the relevant information to the Commission.

Quite recently, Enterprise had provided GFSC with the indicative outcome of the independent review. The impact of the independent review is a severe deterioration in the Enterprise’s position, which is now insolvent.

Shareholders of Enterprise have been unable to contribute additional capital, and in the interests of policyholder protection, Enterprise has requested that the commission takes steps to control the activities of the Company including issuing winding-up proceedings.

Samantha Barrass, GFSC chief executive officer, said: “We have been working closely with Enterprise since the beginning of the year. We have been working with the company using the new powers available to the Commission under Solvency II to ensure the Commission has the right information to support our supervision. The situation demonstrates the importance of receiving independent verifiable information. This has enabled us to act promptly avoiding unnecessary harm to policyholders.”

Peter Taylor, director of legal, enforcement and policy, said: “The Commission initiated action against Enterprise at the beginning of July. The company has endeavoured to find a way out of its predicament but has not been able to do so.

“Once we had seen the outcome of the independent review of Enterprise’s position Enterprise advised the Commission it was insolvent. We have moved very quickly to ensure that we take all reasonable steps to safeguard the position of existing policy holders. This is an inevitable but unfortunate outcome for all concerned.”