Reserve Bank of Malawi (RBM) Governor Charles Chuka says liabilities for Citizen Insurance Company Limited—currently under liquidation—exceed its assets and could result in the process being longer than expected.
The Supreme Court of Appeal, which made an order winding up the insurance firm on August 20 2014, appointed Chuka, who is the registrar of financial institutions, as the liquidator.
The order by the court was based on the information that the company was bankrupt and would not return to solvency within a reasonable period.
Citizen Insurance Company was placed under statutory management on August 26 2011 by RBM under Section 68 (2) (a) (ii) of the Financial Services Act 2010 to determine its viability.
This was because the company was in gross breach of the Act as management and shareholders of the company failed to address a number of issues that potentially threatened the interest of policyholders and the public.
Chuka yesterday said since the liquidation process is expected to be long, potential creditors will have to register their claims with the liquidator and wait for directions.
“A complete status of the financial position of the company, as at the date when order of winding up was made will be determined with the help of a firm of public auditors.
“Therefore, the process of proving debt will be in line with the ranking of claims as provided for in the law,” he said.
But Chuka said the creditors or claimants who already registered their claims with the Pension and Insurance Supervision Department of RBM are not required to re-register.
At the time of placing the insurance company under statutory management, it obligations in millions of kwacha it had to settle with its creditors.
RBM spokesperson Mbane Ngwira yesterday could not comment on the amount of liabilities the liquidated insurance firm has to settle.
Chartered insurance practitioner Duncan Bvomerani, in an earlier interview, said the placing of the company under liquidation means that all assets held by the company will have to be disposed of accordingly.
‘This means that all the policy holders will face the music, they will suffer. This is a blow to the insurance industry because this will result in the reduced number of insurance companies,” he said.
Bvomerani said the insurance firm has died a “natural death” and RBM will take care of outstanding claims.