Pioneer Insurance has had a ratings downgrade from industry analyst AM Best.
Napier businessman Blair Fitzsimons has admitted to The Dominion Post newspaper that he stole $3.5 million by forging documents and defrauding Pioneer Insurance -- which he used to manage -- to prop up his car rental
company.
Westpac Bank has confirmed it reported Mr Fitzsimons to the Serious Fraud Office, although the SFO would neither confirm nor deny it was investigating.
Pioneer is now trading normally, but two of its founding shareholders John Gifford and Rob Elvidge have lost millions and could lose their homes.
In a statement today, AM Best said it had downgraded Pioneer Insurance's financial strength rating to B (fair) from B+ (good) and the issuer credit rating to bb from bbb-.
The rating actions reflected Pioneer Insurance's decline in risk-adjusted capitalisation due to internal control failures and management reporting deficiencies.
AM Best said it believed that Pioneer Insurance had a fair ability to meet its ongoing obligations to policyholders and was financially vulnerable to adverse changes in underwriting and economic changes.
CU Securities, a company backed by the New Zealand Association of Credit Unions, had acquired 100 per cent of the shares of Pioneer Insurance, AM Best said.
CU Securities intended to inject funds to restore Pioneer Insurance's capitalisation to $6.5 million by today.
The ratings would remain under review pending discussions with management regarding ultimate capitalisation plans and Pioneer Insurance's concrete new business plan for its future operations, AM Best said.
- NZPA
