Motor and General Insurance Company was suspended from carrying out most of its operations yesterday by the Central Bank, said Carl Hiralal, Inspector of Financial Institutions.
"Earlier this morning, the Central Bank took regulatory action and intervened to protect the policyholders by suspending the operations of Motor and General Insurance Company Ltd.
The suspension is for an initial period of 60 days. Based on the results of our monitoring, this has become a necessary step to protect policyholders."
Hiralal made this disclosure yesterday at the Financial Stability Report mid-term review at the Central Bank, Independence Square, Port-of-Spain.
Giving reasons why this action was taken, Hiralal said the company did not comply with basic regulations.
"They have problems with the filing of their statutory returns with the Central Bank. The 2007 to 2008 returns were filed late and were filed incorrectly, and we have had to reject those returns. That makes it difficult for the regulator to assess the financial position of the company.
"We were advised that the company would be able to file their 2009 returns, which is due June 30. Even the current returns would not be coming in time. The company has also had problems funding the statutory fund.
"The company has not complied fully with our request and this puts policyholders in jeopardy," he said.
He said the suspension yesterday occurred at all of the company's local offices.
"As far south as Point Fortin, New Grant and as far East as Sangre Grande. There are 11 offices in Trinidad and one in Tobago, and one branch in the Cayman Islands. We are liaising with our counterparts in the Cayman Islands with regards to the operation of this foreign branch."
Hiralal said help was also brought in from the professional services firm, PricewaterhouseCoopers, for the investigation.
"In order to help us with the supervisory action that was taken, we have engaged Brian Hackett, director of PricewaterhouseCoopers Ltd, to assist the Central Bank with the performance of our function during our period of suspension.
"What this means is that the business of this company has been temporarily suspended in order to allow the Central Bank to go in and carry out a full and proper assessment of its financial condition.
"To this end, the regulator is allowed, under the Act, to take all such measures that may be necessary to prevent the continuation of Motor and General Insurance Company's business during this period of suspension.
"This includes assuming management of the company and suspending the board of the company. The Inspector is also empowered to take charge of the books, records and other documents of the company and to preserve the assets of the company," he said.
He outlined the activities that the company will not be able to engage in during the suspension.
"This means during the suspension period, the company cannot write any insurance business, including used and renewal business, cannot advertise and market its company. However, existing policies remain in force. During this brief suspension, claims will not be processed," he said.
"Suspension of a company's operations under Section 68 (1) of the Insurance Companies Act is not a receivership or liquidation. It is putting the company into a temporary holding position to allow the Central Bank to have the accounting records updated."