CBL Insurance customers urged to check cover

Peter Harris, managing director of financial-risk insurer CBL Corporation. Photo / Dean Purcell

The interim liquidators of CBL Insurance are urging those insured by the firm or whom are beneficiaries of its policies to get advice on whether they need to buy other cover or secure additional or replacement financial risk bonds.

CBL Insurance, a subsidiary of NZX-listed CBL Corporation, was placed under control of McGrathNicol on Friday after the Reserve Bank made an application through the High Court in Auckland.

In a statement today, McGrathNicol partners Kare Johnstone and Andrew Grenfell said they were investigating the business and financial affairs of the company but CBLI was not currently in a position to make any claim payments.

"As a result of the interim liquidation, insureds and beneficiaries under policies and surety and financial risk bonds are urged to obtain advice from their insurance brokers or other professional advisors to determine whether they need to purchase new insurance cover or secure additional or replacement bonds."

The partners said insureds and beneficiaries should take appropriate measures to minimise their losses.

They urged claimants to continue to keep CBLI informed of any claims, and, while claims would continue to be assessed, no payments could be made by CBLI while the company remained in interim liquidation.

"As is the position with open claims, any costs incurred by claimants which may normally be claimable under their policies and for which the policies may be liable will be entitled to rank as unsecured creditor claims should CBLI enter liquidation."

"Should you have any queries in respect of your policy, you should contact your broker or professional advisor in the first instance."

CBL Insurance describes itself as "New Zealand's largest and oldest credit surety and financial-risk provider". It operates in 25 countries.

"The business is focused on financial-risk products, builders' risks, sureties, guarantees and contractor bonds worldwide - in particular in Europe and Scandinavia," the company's website says.

Its parent CBL Corporation appointed voluntary administrators KordaMentha over the weekend to prevent other regulators from taking action after the Reserve Bank move.

NZX suspended CBL Corporation stock earlier this month due to concerns the market operator's regulation team had about whether the company had given complete and true material information to the market.

Trading in the stock was halted before the suspension, with details eked out over subsequent days that prudential regulators in New Zealand and abroad questioned the adequacy of reserves for its French construction insurance division, prompting a credit-rating downgrade and prospective capital raise.

CBL Corporation last week said its European subsidiary's lawyers were opposing an order from the Central Bank of Ireland instructing it to stop writing new business immediately.

CBL said its subsidiary CBL Insurance Europe Dac was continuing to otherwise operate normally and existing policies remained in force.