The High Court on Monday placed troubled life insurer, Bona Life, under statutory management, after an application by regulator, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
The firm, which is the country’s third largest life insurer, is steeped in a fresh crisis after falling short of the regulator’s Prescribed Capital Target (PCT), a prudential rule designed to protect policyholders from adverse events.
A shareholder stalemate over recapitalisation of the business, saw the firm’s founder, Regina Vaka throwing in the towel on January 10, a move that has shaken policyholders who are owed up to P700 million.
NBFIRA CEO, Oaitse Ramasedi told Mmegi this morning that veteran retirement fund administrator, Paul Masie had been appointed Bona Life’s statutory manager.
“The law prescribes what the statutory manager does, which is to go in there and take over the running of the business from both the management and the board,” Ramasedi said.
“In simple terms, the statutory manager is both the management and the board. He looks into the affairs and the status of the company and takes it from there.
“He could say the firm is fine and meeting its minimum capital target and while it is not meeting the PCT, the situation can be normalised.
“Alternatively, he could say ‘I’m on the ground and
Ramasedi stressed that the statutory manager’s appointment was not equivalent to Bona Life being liquidated. He also added that NBFIRA believes Bona Life is solvent and during the period of the statutory management, the firm will continue to meet its obligations to life insurance claims and annuities payments.
“Statutory management is not liquidation. The statutory manager goes in there to take over the running of the organisation and will take decisions that he believes are in the best interests of the stakeholders, chief of whom are the policyholders.
“As NBFIRA, we are committed to making sure there is stability, soundness and safety in the sectors that we regulate.
“All the steps we take are for financial stability,” he said.
Although no period has been set for Masie’s management of Bona Life, NBFIRA generally says it does not want the statutory manager in place “longer than he needs to be”.
At the end of the period of statutory management, Masie will make recommendations to NBFIRA on Bona Life’s fate.