Failed insurer Aldgate may face regulatory probe

Gibraltar-based Aldgate Insurance Company is set to wind up, leaving customers with outstanding claims.

UK-based policyholders are covered by the Financial Services Compensation Scheme (FSCS) if the liquidator fails to squeeze anything out of the stricken insurer.

Michael Oliver of the Financial Services Commission (FSC) in Gibraltar said it would consider whether disciplinary action against the company was appropriate.

Aldgate had been managing its own run-off since February 2007, but had been paying claims until about two months ago, Insurance Times understands. The broker-only insurer offered commercial lines business on an electronic trading platform. Its gross written premium was thought to be below £10m.

An Aldgate company statement said: “The directors … have become concerned about the company’s solvency and have petitioned the Supreme Court of Gibraltar to wind up the company.

“Following this, the directors will be applying for the appointment of a provisional liquidator.”

Its UK claims were outsourced to the Kent-based claims and administration services company Gresham Services, which is understood to have a wide range of clients.

The Aldgate statement said that creditors could forward documents or correspondence on to Gresham or Aldgate. These would be passed to the provisional liquidator.

A Gresham spokesman said: “We will continue to act as a point of contact for all Aldgate claims and correspondence until further notice. The appropriate brokers and claimants are being advised.”

The FSC will work with the liquidator, yet to be appointed, until the company is wound up.

It ordered Aldgate to stop issuing new contracts in February 2007 following a deterioration in company results and capital injection during 2006.

Oliver said policyholders were a “higher priority” creditor under Gibraltan regulation than they were in the UK.

“The FSC’s primary focus will be to ensure that the rights of policyholders, or any other person who has a direct right of action against the company pursuant to a contract of insurance, are protected,” he said.

“It will also consider the circumstances that have led the company’s financial position to deteriorate to its current position.”