Gefion liquidators revealed after unrated insurer's licence revoked

No comments

Chief executive Tonny Anker-Svendsen said the Covid-19 crisis had hampered efforts at raising additional capital

Liquidators have been appointed for unrated Danish insurer Gefion after the Danish Financial Services Authority (DFSA) confirmed the insurer had entered into liquidation on 13 July 2020.

Søren Aamann Jensen from the law firm Kromann Reumert and Troels Askerud from Gefion Insurance A/S have been appointed joint liquidators.

At the beginning of July it was revealed that Gefion had had its licence revoked and will enter voluntary liquidation after the Danish Financial Services Authority (DFSA) failed to extend its recovery period.

Earlier in the year the DFSA decided not to approve Gefion’s recovery plan, since it did not provide “sufficient evidence that the company would be able to fulfill the solvency capital requirement within six months and hence be able to adequately protect the interests of current and future policyholders”.

Gefion subsequently applied for an extension to its recovery period, but the DFSA said that it had “assessed that Gefion Insurance’s application did not provide sufficient evidence that the company would be able to fulfill the solvency capital requirement within the recovery period if an extension was granted” and therefore the insurer’s licence was revoked.

Covid-19 hampers capital injection

Gefion described the decision as “surprising”, saying that the global Covid-19 had created “extraordinary circumstances” and that it had already “obtained a commitment from our shareholders to support the Company with more capital if an extension was granted”.

DFSA chief executive Tonny Anker-Svendsen added: “During the last twelve months, the management has worked hard and efficiently to strengthen the financial position of the company. We have successfully raised more than €10m in new capital during 2019 and were in progressed investment discussions when the Covid-19 pandemic set in with lock-downs effected across the globe, hampering the successful conclusion thereof.

“We are disappointed that the DFSA was not prepared to grant us the necessary additional time to restore the situation to the benefit of all of our stakeholders in these times of great global turmoil.

“We are confident that we would have been able to raise the necessary funds to recover the capital position of the company and meet the requirements of the DFSA if more time had been granted. Unfortunately, our efforts proved insufficient to convince the DFSA. The task is now to liquidate the company as a solvent liquidation in an orderly manner in the interest of policyholders and all other involved parties.”

Gefion added that the company remains solvent and continues to have sufficient assets to meet its expected liabilities as they come due, but added that it had decided to enter into a solvent liquidation “as a consequence of the DFSA’s decisions and pursuant to the requirements of the Danish Financial Business Act”.

As a result, Gefion will no longer write new business or renew existing insurance policies, but will continue to honour claims and said that it will “continue as usual in relation to business that has already been written” and that all of its “agents and claims handlers will be paid as they become due”.