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Johannesburg – A high court in Johannesburg has granted the application to have short-term insurer SaXum Insurance Limited placed under final liquidation.
The matter was heard on Thursday. The circumstances surrounding the court order were explained in a statement issued by the Financial Services Board (FSB).
Due to its insolvent position, the registrar of short-term insurance launched the urgent application on October 12 2016. The registrar indicated that it was in the interest of SaXum’s policyholders to have the company placed in liquidation.
“SaXum’s insolvency resulted from underwriting losses due to a significant increase in claims, combined with impairments to the value of certain of SaXum’s assets,” the FSB stated.
The application was launched following an “intensive process” of monitoring SaXum’s financial position. It also included engagement with shareholders to find a solution.
“The registrar prohibited SaXum from carrying on any new short-term insurance business from 8 September 2016,” stated the FSB. This came following failure of shareholders to recapitalise the business within given deadlines.
The liquidation will prevent “further erosion” of SaXum’s assets. SaXum is unable to pay policyholders claims or repay collateral amounts due to its insolvency. These unpaid claims and collateral is to be considered by a liquidator, during the liquidation process, the FSB explained.
A liquidator is yet to be appointed. Both creditors and policyholders interests will be considered, and none will be “preferred” over the other.
“The registrar will work with the liquidator to safeguard the interests of policyholders,” stated the FSB.
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