The Reserve Bank said yesterday that the High Court had lifted the prohibition on information about the interim liquidator appointment to CBL Insurance.
This, the Reserve Bank’s Deputy Governor and head of financial stability Geoff Bascand said, allowed the central bank to state reasons why it sought this action.
The bank had sought the move after CBL made payments of $55 million in breach of directions by the regulator.
“The payments to overseas companies were made in the context of significant doubts about CBL Insurance’s solvency,” Bascand said.
CBL Insurance, part of CBL Corporation, had described itself as the largest and oldest (40 years) provider of credit surety and financial risk insurance in New Zealand.
Bascand said the Reserve Bank’s concerns about CBL Insurance’s reserving policies and regulatory solvency were being reviewed with CBL Insurance and through an independent investigation commissioned by the Reserve Bank.
CBL Insurance recently confirmed to the Reserve Bank that 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. CBL Insurance did not have our approval but nevertheless paid a total of $55 M to two other entities.
“The payments may provide some creditors of CBL Insurance with an advantage over other creditors,” Bascand said.
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