Reserve Bank investigates Geneva Finance’s Quest Insurance

Geneva Finance's insurance wing is under investigation by the Reserve Bank. Photo / File

Geneva Finance says its unit, Quest Insurance Group, is under investigation by the Reserve Bank’s enforcement team.

The formal investigation was “in relation to certain matters involving Quest,” Geneva Finance said in a statement to the NZX.

The Reserve Bank’s enforcement team had advised Geneva that it had “reasonable grounds” to suspect that contraventions of part 2 of the Insurance (Prudential Supervision) Act 2010 had occurred by and in relation to Quest by its apparent failures to:

(a) establish a statutory fund when required; and

(b) maintain the minimum solvency margin imposed by its conditions of its insurance licence.

These related to matters occurring in 2021 and 2022, and in respect of which Quest has been in frequent contact with the Reserve Bank.

Quest self-reported to the Reserve Bank the apparent breaches of the legislation, Geneva said.

“Quest maintains that at all times it had adequate cash and overall solvency to meet all immediate and future obligations,” Geneva Finance said.

Geneva Finance is a New Zealand-owned finance company that provides finance and financial services to the consumer credit markets.

The finance company started business in October 2002.

In its last annual report for the March year, Geneva Finance said its pre-tax profit came to $4.8 million - down $3.5m or 42 per cent on the previous year’s.

Lower lending in the first half, in conjunction with the increased cost of funds, were the primary contributors to the profit decline.

“This was further exacerbated by the claim costs associated with the Auckland floods,” it said.

The company’s shares last traded at 40.5c, having fallen by 22 per cent over the last 12 months.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.