Probitas seeks new investors after liquidators are appointed at backer Istmo Re
Probitas Syndicate 1492 at Lloyd’s has claimed that it is business as usual as it seeks new investors following the appointment of liquidators at Istmo Compañía de Reaseguros (Istmo Re), the Panama reinsurer which backs the syndicate.
The problems at Istmo Re follow the intervention by the Superintendent of Insurance and Reinsurance of Panama (SSRP), its regulator in Panama, at the end of 2016 and the subsequent downgrade of its financial strength rating to ‘E’ from ‘B’ by AM Best, a rating that reflects a regulatory intervention.
Following that, Probitas 1492 CEO Ash Bathia said the syndicate may seek a buyer for the capacity supplied by Istmo Re.
Following the appointment of liquidators at Istmo Re, Bathia said it is having confidential discussions with a number of new investors to replace Istmo, some of which are at an advanced stage.
He also added that the syndicate is working closely with Lloyd's, which has been kept fully informed of developments.
“Istmo's participation in the Syndicate's underwriting capital for the 2017 year of account is less than 2 per cent and will be replaced as part of the normal mid-year Coming in to Line process,” Bathia said.
“The management continues to have sole responsibility for the running of the Syndicate and, in accordance with the initial agreement, we retain the right to find an acceptable buyer of Istmo’s capacity and shareholding.”
The regulator said its original intervention at Istmo Re was taken for several reasons including Istmo Re failing to cover the minimum regulatory requirements for paid capital, presenting an inferior ratio of net premium to net surplus to that required by regulation and relying on insufficient assets to integrally satisfy its liabilities.
SSRP’s notice of intervention and findings came after its review of the company’s unaudited third quarter financial statements, and an on-site regulatory inspection at Istmo Re’s offices.
Istmo Re had provided the regulators with an action plan dated September 5, 2016, under which it would sell its assets and reduce its outstanding debt over a three-month period. However, as of December 1, 2016, no actions had been implemented and the regulator intervened.
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