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

Regulator reveals insurer operating below solvency requirements.

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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