Tamsyn Parker

Money Editor for NZ Herald

New pressure on Shipley

Sentinel Assurance, linked to former PM, is working to meet Reserve Bank demands.

Former Prime Minister Dame Jenny Shipley says Sentinel is working through the new licensing requirements with the Reserve Bank. Photo / APN
Former Prime Minister Dame Jenny Shipley says Sentinel is working through the new licensing requirements with the Reserve Bank. Photo / APN

Another company linked to Dame Jenny Shipley is under pressure and may be forced to stop operating by September if it cannot meet new Reserve Bank requirements.

Sentinel Assurance is owned by Seniors Money International, of which Shipley is the chairwoman.

Shipley has come under fire recently since the collapse of construction company Mainzeal. She resigned as chairwoman of Mainzeal on December 31 - just six weeks before the company went into receivership on Waitangi Day.

Sentinel, which is New Zealand's largest provider of home equity release mortgages, noted in its annual report in June last year that it did not meet the minimum solvency requirements for the new Reserve Bank licence and was investigating potential solutions.

"If solvency cannot be achieved the company may need to cease its insurance activities," the report stated.

The firm's auditor, KPMG, also noted that while the company was working with the regulator to resolve the licensing issues, the existence of the "material uncertainty" cast doubt on the company's ability to "continue as a going concern".

Under new licensing requirements brought in after the collapse of insurer AMI, Sentinel is required to have $5 million in solvency capital on its balance sheet.

Sentinel's accounts show it does not have any capital that meets the solvency requirements because the capital is held by a related party.

Shipley said Sentinel was working through the new licensing requirements with the Reserve Bank and was on target to meet full licensing requirements.

"[Sentinel] expects the Reserve Bank will issue a solvency standard for captive life insurers, under which the company will have a significant solvency surplus."

She said Sentinel's parent company Seniors Money international was on track to make a $10 million operating profit and was well positioned for the future.

Sentinel chief executive Vaughan Underwood said the company did not need to raise capital and insisted it was about getting its classification and internal structuring right.

"It's a little bit about them [the Reserve Bank] understanding us better. It's clear we are in a slightly different category."

Asked why the discussion was taking so long to resolve, Underwood said "it doesn't feel like that long".

"To engage with a large organisation everything takes time. It doesn't feel like there are any hold-ups."

A spokesperson for the Reserve Bank said that in most cases the minimum capital and solvency requirements for insurers came into effect on December 31 last year as specified in their provisional licences.

However, the bank said it envisaged most full licences would be issued by the end of June.

Questions have been raised about Shipley's suitability as chairwoman of Genesis Energy ahead of its planned partial float on the stock exchange.

Asked if she would stand down if investors were put off buying into Genesis because of her involvement with Mainzeal, Shipley said she would do what was best for the company.

"In all my governance roles I focus on the best interest of the companies and I will continue to do so."

- NZ Herald

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