At the outset it should be noted that in my role as Minister for Finance I have responsibility for the development of the legal framework governing financial regulation. The day-to-day responsibility for the supervision of financial supervision is a matter for the Central Bank, which is statutorily independent in the exercise of its regulatory functions.
Setanta Insurance Company Limited (Setanta) is a Maltese incorporated company subject to prudential supervision in Malta by the Malta Financial Services Authority (MFSA). Its financial position is not supervised by the Central Bank of Ireland. The Central Bank has been in discussions with the MFSA in relation to Setanta since November 2013 when it identified issues during a consumer protection themed inspection and immediately referred the matter to the MFSA for further investigation. There was regular contact in the following months on additional issues which led to the announcement in January that the firm would cease writing new business and issuing further renewals.
The Central Bank wrote on the 21st January 2014 to advise my Department of their concerns with Setanta's solvency margin and I was subsequently informed of this. A widely reported press release was issued by Setanta Insurance on January 27th 2014 which stated that the insurer had resolved to cease carrying on the business of insurance, including the renewal of existing business, with effect from close of business of 24 January 2014. Setanta then appointed Heritage Insurance Management (Malta) Limited to undertake the run-off process and the insurer advised the MFSA accordingly.
Contact continued between the Central Bank and the MFSA and, on 11 April 2014, the MFSA advised the Central Bank that the directors of Setanta were considering the potential liquidation of the company. There was ongoing contact on the following days. Setanta announced that the shareholders had recommended the appointment of a liquidator on 16 April 2014 subject to approval of the MFSA. On April 16th I was advised that the shareholders of Setanta had resolved to wind up the company and a liquidator had been provisionally appointed.
The Central Bank continues to have ongoing contact with the MFSA and with the liquidator of Setanta Insurance Company Limited as well as the various industry representative bodies. It is also engaging with the brokers who sold the policies to ensure they assist policyholders and keep them informed. In addition, it has contacted all brokers to instruct them to write to policyholders that hold a current Setanta motor insurance policy and inform them of the urgency of making alternative motor insurance arrangements. It should also be noted that my Department has met the Liquidators of Setanta to highlight the need for an orderly wind-down of the company. They emphasised the importance of a smooth transfer of policy holders to new providers and also the need for an orderly process for claimants to get what is due to them under Setanta policies.
On 9 May, the Liquidator of Setanta Insurance placed notices in national media informing policyholders of his intention to cancel all policies issued by Setanta Insurance by way of a 7 or 10 day cancellation notice. The Liquidator confirmed that all policy holders, that have not already done so, should arrange alternative cover without delay as claims are unlikely to be paid in full and once the notice period has expired all policies will be cancelled by the Liquidator. The Liquidator has since formally commenced its operations and has written to policyholders confirming the above position. The Central Bank strongly recommends that policyholders who receive these letters immediately contact either an insurance broker or an insurer directly to seek alternative insurance cover.