First Mutual Life cautions shareholders
First Mutual Holdings has issued a cautionary statement regarding its subsidiary First Mutual Life and its subsequent ongoing forensic audit by the Insurance and Pensions Commission (IPEC).
The insurance regulator accused the company of submitting an unsatisfactory report during an asset separation exercise done in 2021.
In a statement, First Mutual Holdings said; “On 5 April 2022, stakeholders were advised that the Insurance and Pensions Commission intended to perform a forensic investigation on First Mutual Life Assurance Company (FML), a subsidiary of First Mutual Holdings Limited arising from the asset separation exercise initiated by IPEC.
The investigation was completed in February 2023 and the report was submitted to the Minister of Finance, Economic Development and Investment Promotion in accordance with section 67 of the Insurance Act [Chapter 24:07).
“In line with the Act. FML submitted representations on the contents of the report to the Minister on 8 June 2023. On 21 December 2023, FML received a response from IPEC indicating that the Commission was mandated by the Minister to institute corrective measures. The Corrective Order issued by IPEC is receiving due attention from the FML Board and management,” the statement added.
IPEC in 2022 said a number of anomalies were observed on several insurance companies.
“The exercise was necessitated by the notable non-compliance by several insurance companies against the afore-mentioned legal requirements, which had the potential to prejudice policyholders in favour of shareholders,” IPEC said in 2022.
With respect to FML, the assessment done by IPEC was in order to verify the extent to which FML complied with the provisions on asset separation, which the regulator said warranted an in-depth investigation.
The insurance regulator said the audit was part of the supervisory interventions to gauge the level of compliance with the above legal provisions.
The Commission expected the audit to take less than four months after signing of the contract with FML but it however took seven months to complete due to unsaid reasons.
The objective of the asset separation exercise is to enforce compliance with requirements of the new industry legal provisions.
“The spirit behind these legal provisions on asset separation is to ensure that there is no transfer of assets from policyholders to shareholders and vice versa,” says IPEC.
The exercise was done to identify assets that may have been misappropriated from policyholders to shareholders or vice versa; quantifying the assets that may have been misallocated and apportioning them to their rightful owners; and enhancing compliance with the legal requirements for asset separation as a way of improving good governance in the insurance and pension sector.
-ebusinessweekly
