Global insurer is put into liquidation

Guernsey-registered GBG Insurance Ltd was placed into administration by the Royal Court last December, pre-empting the collapse of the US-headquartered Global Benefits Group earlier this year.

Audited accounts showed that the business was in good health but directors discovered that declared assets representing more than $70m. did not exist. Efforts were made during 2023 to sell the business, and at several points it was thought that a deal could be achieved.

But a year ago the final potential purchaser backed out and the directors of GBG had no choice but to seek administration. The local firm of Teneo was appointed and has completed the administration process.

GBG, which was licensed by the Guernsey Financial Services Commission, had nine offices across four continents, offering health, life, disability and travel insurance primarily to an ex-pat customer base. It was a managed operation in the island and though it had a local board, the customer base was global. It had been quoted on the London AIM market before it was taken private in 2019.

Its 2022 accounts showed gross written premium of more than $240m. It did not employ any staff directly and business operations were managed by other group companies or third party administrators, with premium income paid to GBG Insurance.

The company was kept afloat in administration, and as the company had about 140,000 insurance policies across the world, much time was spent dealing with customer inquiries.

Efforts were made to recover monies owed, including inter-company debts, and some parts of the group were sold, including TieCare, a provider of customised employee benefit plans to schools worldwide, which involved no cash payment but relieved the group of its liabilities.

Creditor claims will now be assessed during the liquidation.

Teneo, as administrator, had said it expected to declare an interim distribution to preferential creditors within a year.

They are very unlikely to be paid in full, and the prospect of a pay-out to unsecured creditors is said to be unlikely.

Teneo said, in a report to creditors, that it was expecting the distribution pay-out to ‘not be without challenge’.

‘The number of policyholders likely eligible to receive a distribution will require a very high volume of correspondence to obtain and confirm payment details. It is anticipated that for commercial reasons the liquidators will need to set a de minimis payment level where the costs of processing the distribution exceed the payment value.’

It said that there was also an issue with critical care payments. The insolvency had caused significant disruption for policyholders who relied on this insurance to pay claims for medical treatments.

For some, a failure to continue treatment posed an immediate and serious risk to their lives, so a critical care framework was set up to address this, with administrators working with claims specialists and medical professionals to consider the level of support that could be provided.

n The Guernsey Financial Services Commission said last year that it would conduct an investigation focusing on how the ‘hole’ in the company’s finances developed and why it was not spotted earlier. A spokeswoman confirmed that this investigation was continuing.