The Insurance Authority (IA), through its appointed managers, has presented a winding-up petition against Target Insurance, which is deemed insolvent under Hong Kong’s Insurance Ordinance.
In January, the IA appointed Derek Lai and Forrest Kam of Deloitte Touche Tohmatsu to take full control of Target’s affairs, business and property and to conduct a comprehensive review of its financial position.
“Over the past six months, our efforts to recover the funds owed to Target and repeated demands for capital injection from shareholder controllers to meet the minimum solvency margin of the company have not received any positive feedback,” an IA spokesperson said. “Target has violated the statutory regulatory requirements and its assets are insufficient to meet its liabilities. Against this background, it is incumbent upon the managers to petition for the winding-up of Target.”
According to the IA, around 30,000 affected policies – 96% of which are motor policies – will remain in force until their expiry dates, with policyholders able to submit their claims as usual. The Motor Insurers’ Bureau (MIB) of Hong Kong and the Employees Compensation Insurer Insolvency Bureau (ECIIB) will take up claims arising from third-party motor and employees’ compensation business, which are estimated to be about 94% of Target’s insurance liabilities. Target will continue to handle the remaining 6% of liabilities.
“Based on the current circumstances, a statutory deposit of HK$250 million placed in trust with the IA for Target, together with estimated realisable assets of Target and the two insolvency funds managed by MIB and ECIIB, should be adequate to settle all valid outstanding claims and projected insurance liabilities,” Lai said.
Earlier this year, the appointed managers stopped the renewal of taxi policies that were set to expire from February to August and later extended this arrangement to all other policies. The Central Distribution System set up by the IA is facilitating the migration of displaced taxi and public light bus policies to other insurers.
According to the regulator, there is ample capacity in the general insurance market to absorb the remaining policies. Policyholders who wish to obtain further information were advised to contact the Hong Kong Federation of Insurers.
