First Mutual Life Assurance attends to corrective order following forensic audit by IPEC
LISTED First Mutual Life Assurance (FML) has said it is attending to a Corrective Order issued by the Insurance and Pensions Commission after (IPEC) conducted a forensic audit on FML accusing the company of submitting an unsatisfactory report during an assets separation exercise.
On 5 April 2022, IPEC said the exercise was necessitated by the notable non-compliance by several insurance companies against the FML legal requirements, which had the potential to prejudice policyholders in favour of shareholders.
“Pursuant to various enquiries from stakeholders on the planned forensic audit on First Mutual Life (FML), the Commission wishes to advise stakeholders as follows: The Insurance and Pensions Commission ( IPEC) has been conducting an asset separation exercise in the insurance and pensions industry in line with the provisions of the Insurance Act (Chapter 24:07) and the Pension and Provident Funds Act (Chapter 24:09),” read part of the statement issued in 2022.
The commission said the objective of the asset separation exercise was to enforce compliance with the requirements of the FML legal provisions.
In a cautionary statement to shareholders last Friday, First Mutual Life said 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] (“the Act”).
“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,” reads part of the notice adding that the Corrective Order issued by IPEC is receiving due attention from the FML Board and management.
“As these developments may have a material effect on the price of the Company’s securities, shareholders are advised to exercise caution when dealing in the Company’s securities pending a full assessment of the implications of the Corrective Order.”
IPEC said the spirit behind the legal provisions on asset separation was to ensure that there is no transfer of assets from policyholders to shareholders and vice versa.
“With respect to FML, the assessment done by IPEC to date, in verifying the extent to which FML complies with the provisions on asset separation, has warranted an in-depth investigation.
“The audit is part of the Commission’s supervisory interventions to gauge the level of compliance with the above legal provisions. The Commission expects the audit to take less than four months after signing of the contract with the appointed firm,” added IPEC then.
IPEC is a statutory body that was created through an Act of Parliament – the Insurance and Pensions Commission Act [Chapter 24:21] to regulate the insurance and pensions industry in Zimbabwe.
The Commission’s principal function is to protect the interests, rights, and benefits of insurance and pension consumers (policyholders and fund members) and to ensure that there is general stability in the insurance and pension industry.-chronicle
