PHILIPSBURG--The Court of First Instance in Curaçao on Wednesday pronounced an emergency regulation with regard to insurance company Ennia. A request for such measure was submitted Tuesday afternoon by the Central Bank of Curaçao and St. Maarten, which request was discussed at a hearing one day later.
In the Court’s view, the interests of Ennia’s creditors – including policyholders and insured parties – demand that the emergency scheme takes effect. “The Central Bank is thus given the opportunity to implement its wish to restructure Ennia and to improve the solvency of Ennia,” the Court said in a brief statement to the media.
The measure includes Ennia Caribe Leven N.V., Ennia Caribe Schade N.V., Ennia Caribe Zorg N.V., EC Investments B.V. and Ennia Caribe Holding N.V. The control over all these companies ultimately lies with major shareholder Parman International B.V, owned by Hushang Ansary.
Ennia Caribe Leven, Ennia Caribe Schade and Ennia Caribe Zorg are subjected to Central Bank supervision. On July 3, the Central Bank repealed the permits of these three entities, which, Ennia claims, does not automatically mean they can no longer perform their duties as an insurance company.
According to the Central Bank, Ennia has a serious and worsening solvency deficit, which alone already justifies an emergency regulation.
The Central Bank stated that the policy makers of Ennia’s life-, property- and health-care insurance branches and ultimate shareholder Ansary do not follow the recommendations of the Central Bank and the “silent” curators.
The assets belonging to Ennia via EC Investments and Ennia Caribe are withdrawn from Central Bank supervision and attempts were made to withdraw US $100 million from EC Investment’s securities account with Merrill Lynch banking company in New York, which, the Central Bank says, justifies fears that these assets are taken out of Ennia.
The Court said that these arguments were “plausible” and that the measure should be imposed to guarantee the interests of creditors, including persons insured with Ennia.
The Central Bank requested the emergency regulation for all five Ennia entities. The insurer contested this and stated that under the Ordinance Supervision Insurance Companies LTV the Bank holds no authority over EC Investments and Ennia Caribe.
The Court, however, found it proven that Ennia’s insurance activities are performed by all its branches, including EC Investments and Ennia Caribe. EC Investments is the entity in which the underlying assets, largely consisting of premiums paid by policy holders, are transferred. EC Investments and Ennia Caribe both are engaged in the management of funds and assets for the benefit of policyholders, insured persons or other beneficiaries.
The assets of Ennia’s insurance branches consist for 82 per cent of loans to and receivables on affiliated entities, totalling approximately NAf. 1.5 billion. With the emergency regulation the Central Bank wants to restore Ennia’s solvability.
According to the Bank, this is only possible if it can reverse the currently existing construction of indirect investment and can have the underlying assets of the insurance company at its disposal.
The Court said it had become apparent that an emergency regulation without EC Investments and Ennia Caribe would not serve the interests of Ennia’s joint creditors. Therefore, the emergency regulation was also imposed on these two entities.
In this light it was taken into consideration that Ennia is good for 50 per cent of the total insurance market in Curaçao and St. Maarten and for 80 per cent of the pension market in Curaçao.
Central Bank Director José Jardim and supervisors K. Kleist and Rajen Mahes were present at the Court hearing, during which Ennia was represented by Chief Executive Officer Ralph Palm, Chief Commercial Officer Reinald Curiël and President and General Managing Director of Ennia Caribe Holding Richard Gibson.