CBL Insurance paid $55m overseas in breach of Reserve Bank orders

RBNZ head of financial stability Geoff Bascand said the payments were made while the bank had serious doubts about the company’s solvency. (Photo: Rob Hosking)

CBL Insurance made payments of $55 million to overseas companies in breach of Reserve Bank orders, the regulator said today.

In a statement released this afternoon after the lifting of some confidentiality orders by the High Court, the Reserve Bank said the payments led directly to its request to appoint interim liquidators to CBL Insurance.

Shares in the insurer’s parent company, CBL Corporation, are suspended and the rest of the New Zealand group is in administration.

Reserve Bank head of financial stability Geoff Bascand said the payments were made while the bank had serious doubts about the company’s solvency.

CBL Insurance had also confirmed to the bank it was continuing to operate despite being below the minimum regulatory solvency level.

“In this context, the Reserve Bank had issued a direction that CBL Insurance must consult with us and have our approval for significant transactions,” he said.

“CBL Insurance did not have our approval but nevertheless paid a total of $55m to two other entities. The payments may provide some creditors of CBL Insurance with an advantage over other creditors.”

More to come.


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16 Comments & Questions

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Incredible stuff. These directors are toast.

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Assuming the directors knew - if they didn't then probably still toast on different levels. My guess is that directors liability insurance would probably not cover this type of action either ...........

This is going to get really interesting....

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Their directors liability policy would cover defences costs until a court finds that they intentionally broke the law. At least any half decent policy would.

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One is the chair of a fund manager. Does your money feel safe?

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CBL equals Cooked Books Limited?

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This sucked in many investors including a few well-known fund managers
The boards of those entities might be asking a few questions as will their investors

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It's crazy that this isn't being reported on more widely or seen to be that big a deal – people seem to ignore it because it isn't Fletcher Building but in reality what has happened here is, in the longer run, potentially far more severe. Share trading is frozen indefinitely, major subsidiaries are in liquidation, the parent company in administration...and somehow just months before this company was worth $750m, earning EY awards, and bragging about their financial position. What a train wreck!
Pedestrian media doesn't really seem to get it.

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One thing that this Reserve Bank announcement effectively confirms is that shareholders have lost everything. CBL has just had a Do Not Resuscitate sign slapped on it.

And given how long these issues have been lingering without public disclosure, that prior selldown of shares by senior management will come under incredible scrutiny. How could the Board possibly allow that to happen?

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Ummm who signed solvency certificates for payments?

Please........name Directors & Executive

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whadda think the chances are the directors are all now trying to find the most expensive lawyers in town?

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The alarm bells will be ringing loudly at the D&O insurer, whoever they are. Which regulator will be the first to take action here? Almost spoiled for choice as they've got every base covered? (NZX, FMA, RB, and possibly the SFO).

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Another ripper of a lending decision from ANZ, the best stock-picker in the listed market. Adding CBL to the portfolio of Pumpkin Patch, Veritas, and Intueri means they now have critical mass for their own internal distressed debt fund.

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Dumb decision by management and directors - better to have let the overseas entities go (under).

Look after the mother ship.

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Not sure DO Liability will cover this(this looks to set a new bar as to incompetence and Governance and I won’t say the last word):Sir John Wells I am so surprised this has happened under his watch;:someone should write a book about what’s happened once it becomes clear

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It's just another normal business day in the good old wild west of New Zealand. Why all the fuss? We should be used to this sort of thing by now, I know I am. I almost come to expect it.

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Did the mony go to overseas companies or to someone's offshore bank account.Worried UK shareholder.

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