The troubled Danish provider says it is “disappointed” after Danish regulator refuses three-month extension to its recovery period forcing it into run-off.
The Danish Financial Supervisory Authority’s (DFSA) has withdrawn unrated provider Gefion Insurance’s license as an insurance company.
As a result, Gefion has entered into solvent liquidation and will no longer write new business or renewals.
This follows the DFSA’s decision not to approve the insurer’s recovery plan in March this year. At the time the provider was also ordered to stop writing new business.
In an update on 29 June, the DFSA explained that it has now refused to grant Gefion a three-month extension of its recovery period.
The regulator said in a statement: “The DFSA has assessed that Gefion Insurance’s application did not provide sufficient evidence that the company would be able to fulfil the solvency capital requirement within the recovery period if an extension was granted.
“Therefore, the DFSA has withdrawn Gefion Insurance’s license as an insurance company.”
In response, Gefion has insisted that it is solvent and “continues to have sufficient assets to meet its expected liabilities”, adding that it had obtained commitment from its shareholders to support the company with more capital if an extension was granted.
Tonny Anker-Svendsen, Gefion chief executive officer, commented: “During the last twelve months, the management has worked hard and efficiently to strengthen the financial position of the company.
“We have successfully raised more than €10m in new capital during 2019 and were in progressed investment discussions when the Covid-19 pandemic set in with lockdowns effected across the globe, hampering the successful conclusion thereof.”
He continued: “We are disappointed that the DFSA was not prepared to grant us the necessary additional time to restore the situation to the benefit of all of our stakeholders in these times of great global turmoil.
“We are confident that we would have been able to raise the necessary funds to recover the capital position of the company and meet the requirements of the DFSA if more time had been granted.
“Unfortunately, our efforts proved insufficient to convince the DFSA. The task is now to liquidate the company as a solvent liquidation in an orderly manner in the interest of policyholders and all other involved parties.”
The troubled Danish provider has had solvency issues for a long time. Earlier this year it reported that its solvency ratio for 2018 had fallen from 72% to 49% after it published corrected information for its 2018 annual report.
In addition, last December the DFSA published a liquidity order in which it stated that Gefion needed to have liquid assets of at least €5m (£4.2m) by the end of the month.
Insurance Age revealed in January that the business had complied with the order following further investment from its shareholders.
Gefion was also flagged as being involved with the collapse of UK broker Staveley Head earlier this year.
In February it issued a response to the news that Staveley Head had gone into administration, stating that it did not prematurely terminate its contract with the business.
In the same month, Bollington confirmed it had suspended trading with Gefion until further notice. Last December, UK-based motor MGA Pukka stopped writing new business with the Danish provider.
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