Troubled insurer 3Sixty Life launched a second application for leave to appeal against the High Court’s decision to place the company under final curatorship a day after its first application was dismissed.
A statement released by the South African Reserve Bank on Friday outlines the recent history of the company and its ongoing battle with the Prudential Authority (PA), a division of the SARB.
3Sixty Life was registered as a life insurer in terms of the Long-term Insurance Act until its registration was converted to an insurance license under the Insurance Act in June 2020. 3Sixty Life is licensed to conduct life insurance business specifically in the form of life and funeral products for groups and individuals.
3Sixty Life is wholly owned by Doves Group Holdings, which is ultimately owned by Numsa Investment Company.
The PA became aware that 3Sixty Life had failed to maintain its business in a financially sound condition by not holding funds at least equal to the minimum capital or solvency capital requirements. 3Sixty Life informed the PA that the failure was attributed to higher-than-usual claims and a shortfall in its budgeted premium income, both as a result of the Covid-19 pandemic and related lockdown restrictions.
During 2021, the PA had numerous engagements with 3Sixty Life in an effort to gradually implement measures to return the insurer to financial soundness. This included a plan by Doves to recapitalise the insurer.
In November 2021, the PA informed 3Sixty Life that if its recapitalisation plan had not materialised and its business had not returned to financial soundness by December 1, 2021, the company would be prohibited from taking on any new insurance business. In addition, 3Sixty Life was informed of further regulatory steps that could be taken by the PA should the recapitalisation fail.
3Sixty Life, however, failed to restore the business to financial soundness by the deadline.
In accordance with the powers granted to the PA under the Insurance Act, read with section 5(1) of the Financial Institutions (Protection of Funds) Act, the PA applied to the High Court, Gauteng to place 3Sixty Life under provisional curatorship.
The order was granted, and with effect from December 21, 2021, 3Sixty Life was placed under provisional curatorship.
Yashoda Ram was provisionally appointed as the curator of 3Sixty Life, and the High Court issued specific directives to her to take immediate control of the business.
The High Court initially set a return date of April 12, 2022, at which time 3Sixty Life or any other interested party could show cause why the provisional order, and the curator’s powers, should not be made final.
The return date was anticipated by the board of directors of 3Sixty Life and brought forward to March 22, 2022. The High Court thus, on March 22, heard from interested parties who opposed the confirmation of the provisional curatorship as well as from the PA, which requested confirmation of the curatorship. After this hearing, judgement in the matter was reserved.
On 30 September, the High Court delivered its judgment confirming the curatorship of 3Sixty Life. The High Court appointed Tinashe Mashoko of BDO Advisory Services as the final curator with effect from September 30.
3Sixty Life submitted an application to appeal the confirmation of the curatorship. As a result of the appeal, the High Court’s order of September 30 was suspended by default.
The application for leave to appeal was heard by the High Court on November 2022. On November 7, the High Court dismissed the application for leave to appeal, with costs.
3Sixty Life delivered another application for leave to appeal the following day. The result of this application also suspends the order of 30 September 2022, by default. The PA also intends to oppose this application for leave to appeal.
Based on the information available, the PA remains of the view that the curatorship of 3Sixty Life is in the best interests of its policyholders. The PA says it will work together with the Financial Sector Conduct Authority, which is responsible for the regulation of market conduct, and the curator to ensure 3Sixty Life’s policyholders continue to be properly protected during this process.
The curatorship, in the PA’s view, presents the most suitable and most effective mechanism to facilitate the orderly management of 3Sixty Life back to a position of financial soundness. With the appointment of the curator, the board and management of 3Sixty Life were relieved of their powers.
At this stage, the business of 3Sixty Life will continue under the control of the curator, the PA says.
3Sixty Life policyholders who have any concerns, claims-related queries and complaints may contact the curator at [email protected].
PERSONAL FINANCE