By Walter Muchinguri
The insurance and Pension Commission has suspended short term reinsurers KMFS and Global insurance and reinsurer, New Reinsurance Company from underwriting new business due to failure to meet minimum capital requirements.
According to IPEC the three were holding capital below the current minimum regulatory capital of $1,5 million.
"The four insurance companies (including Altfin) were holding capital ranging from $122 000 to a negative $590 000. Some of these entities were doing creative accounting (misrepresenting their financial positions) concealing the capital inadequacies, to portray adequately capitalised positions.
The suspensions were effected last week after the Commission had established, through onsite inspections that these entities were financially unsound and were inadequately capitalised.
"The adjustment of the financial position of the entities taking into account non-admissible assets revealed weaker positions that resulted in the said regulatory action against the affected players," IPEC said.
All registered non-life reinsurers are expected to be compliant with the minimum regulatory capital requirement of $1,5 million.
According to the latest short-term report for the period ended September 30, 2014, New Reinsurance Company's capital position was $617 000 and it was the only reinsurer out of the nine registered insurers that had not complied with the minimum capital requirement.
KMFS and Global insurance had capital positions of $460 028 and $662 505 respectively. The two were part of four short-term reinsurers that failed to meet the minimum capital requirement together with Excellence and Altfin which had capital positions of $749 625 and $906 000 respectively. Altfin's insurance licence has since been cancelled.
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