The Gibraltar Financial Services Commission (GFSC) has announced that MCE Insurance Company Limited – which sold motorbike and car insurance to clients in the UK and Ireland – has entered administration.
The announcement follows the insurer’s application for administration to the Supreme Court of Gibraltar on 19 November.
Andrew Stoneman and Geoff Bouchier, managing directors of the restructuring advisory practice at corporate investigations and risk consulting firm Kroll (Gibraltar) Limited, have been appointed as joint administrators of the company.
The Financial Conduct Authority (FCA) has also issued a statement on Monday stating that MCE Insurance operated in the country on a freedom of service basis, allowing UK-based customers to hold policies with the firm. The policies were sold through its Northamptonshire-based broker, MCE Insurance Ltd (MCE UK), which also provides various administration services, including claims management. MCE UK is not under administration, noted Kroll.
The FCA added that MCE Insurance has ceased writing new policies for UK customers on 05 November. Existing insurance policies, however, remain in force and are valid until their renewal dates.
“MCE UK and the joint administrators will liaise with the Financial Services Compensation Scheme (FSCS) in relation to eligible insurance claims and, in due course, other statutory compensation schemes of other countries as appropriate,” Kroll said in a statement. “The joint administrators understand that MCE UK is working closely with an alternative provider with the intention of being able to offer quotations for future insurances to existing customers.”
In a separate statement, the FSCS said that any new policies taken out from MCE Insurance since 05 November have been underwritten by a different provider and were unaffected by the changes.
“We are in the process of identifying how many UK customers are affected by the failure of MCE Insurance Company Limited,” said FSCS chief customer officer Sarah Marin. “We are working closely with the administrators to make sure that all eligible policyholders are protected.”
“FSCS will protect the majority of UK-based customers of MCE Insurance Company Limited who are individuals or small businesses with an annual turnover of less than £1 million,” she added. “We want to reassure MCE Insurance Company Limited customers that their claims will continue to be considered against the terms of their policy and that FSCS will be stepping in to protect eligible customers.”
Julian Edwards, chief executive officer of MCE Insurance, has condemned the GFSC’s move, describing it as “the latest in what appears to be a vendetta against MCE UK-Co and an act to sabotage a successful portfolio transfer.”
“The GFSC has applied Capital Add Ons to Green Realisations No. 123 Ltd. (GR, formally MCE Insurance Company Ltd.), which has in turn led to an orderly and solvent filing for administration,” he said in a statement. “MCE UK business had already made the decision to restructure and transfer our portfolio to a UK insurer, the GFSC had been made aware of this.”
“We have taken advice and believe the GFSC have acted negligently and in bad faith, which could result in the loss of jobs and potentially the insolvency of GR,” he continued. “The GFSC applied capital add-ons to financial structures that they had previously either proposed and or approved, then subsequently worked with MCE to implement.”
Edwards added that the GFSC’s position “is not in the best interests of policyholders or claimants.”
“Regardless of whether GR agree with the GFSC Capital Add Ons or not, MCE made proposals to immediately meet any shortfall in the MCR and provide a surplus in respect of the SCR,” he said. “These proposals were based on solvency calculations by Aon Global Risks Consulting, Robus Insurance Managers and the GFSC. MCE’s recovery program would have injected £20.5 million into GR. The GFSC have declined these recovery measures, for reasons we cannot understand.”