Guernsey-headquartered international travel, life and health insurance provider GBG Insurance has fallen into administration after a last-ditch December sale attempt fell through, marking the final bid to save the troubled insurer.
Failed GBG Insurance faces an investigation from the Guernsey Financial Services Commission (GFSC) on how a “large hole” in its balance sheet discovered in March 2023 went unnoticed, the regulator said in December.
GBG Insurance provided individual and group policies on both a direct and reinsured basis, administering insurance across the US, Latin America, Europe and some Asian markets.
Directors of GBG Insurance approached the regulator last March on discovering that while audited accounts showed the company was “in good health”, assets totalling millions shown in the accounts did not exist, according to the GFSC.
Ratings agency AM Best withdrew GBG Insurance’s BBB+ financial strength rating last April, citing a “lack of information available” to continue its interactive rating process.
Despite a “strong prospect” that GBG Insurance could have been rescued by potential deals, the final opportunity slipped away last December when a potential buyer decided to pull out rather than inject large amounts of fresh capital into the business, the GFSC said in a notice shared on its website.
Guernsey regulator GFSC launches “lengthy and complex” investigation into GBG Insurance
The GFSC’s investigation is likely to be “lengthy and complex”, with the commissioner having said it is unable to predict its outcome.
“Whilst we must clearly investigate thoroughly, we would not wish the fact of our investigation to lead anyone to draw any adverse conclusions about the current directors of GBG,” the GFSC said. “At present, we have no evidence to suggest they are not competent people with integrity.”
Teneo Financial Advisory’s Alex Adam, Andrew Wood and Michael Tagg have been appointed as joint administrators of GBG Insurance.
“We are highly appreciative that GBG’s policyholders will be concerned by the news that the company is entering administration,” Adam said in a Press release shared with Insurance Business. “As joint administrators, we will be focused on minimising uncertainty and disruption for policyholders, and are assessing what options may be available to transfer policies to other insurance providers.”
Not all customers of insurance underwriter and distributor Global Benefits Group (GBG), which has not entered insolvency, will be affected by the failure of GBG Insurance, according to both GBG Insurance and the GFSC.
GBG customers have been urged to check their policy documentation to ascertain whether GBG Insurance was the sole insurer.
A replacement coverage solution for customers of GBG’s TieCare, which provides employee benefits and insurance solutions for international schools, has been sought, and, as of December, the GFSC said an arrangement with an A-rated carrier was being finalised.
In a WARN notice filed in late 2023, GBG cautioned of layoffs affecting employees at its Miami, Florida, US branch, BNN Breaking reported.
GBG’s general counsel estimated that 25 staff could be cut in a tranche of layoffs beginning this month, with further potential job losses into the first half of 2024, according to the report.
GBG has offices in the US, Canada, India, China, the UK, the Philippines, Austria, Serbia and South Africa, according to the TieCare website.
What’s your view on GBG Insurance’s insolvency and the GFSC’s looming investigation? Leave a comment below.
