Creditor seeks to bar replacement of manager at collapsed Blue Shield
What you need to know:
Insurance Regulatory Authority in a newspaper advertisement last Saturday announced that the Policyholders’ Compensation Fund would take over from Mr Muriithi as the statutory manager.
Commissioner of Insurance and IRA chief executive in his request for extension had argued that the process of firm’s turnaround is ongoing and the extension would help shareholders comply with revival conditions which include a cash injection of Sh600 million.
Blue Shield was put under statutory management in September 2011. It was given a clean bill of health by its statutory manager early this year.
A creditor of the collapsed Blue Shield Insurance has moved to court seeking to reverse the replacement of the firm’s statutory manager last week.
Naomi Wanjiku Maina, High Court advocate who claims the insurer owes her Sh51 million in legal fees, says the removal of Mr Eliud Muchoki Muriithi hours after the court had extended his stay as the custodian of Blue Shield is meant to frustrate revival of the firm.
The Insurance Regulatory Authority (IRA) in a newspaper advertisement last Saturday announced that the Policyholders’ Compensation Fund would take over from Mr Muriithi as the statutory manager. The statement said his term expired on July 4.
“Honourable court be pleased to grant orders of injunction directing the applicant/first respondent by himself, his officers, and agents to forthwith withdraw, cancel and reverse the unlawful and illegal removal of the statutory manager of the respondent done by the applicant on July 4, 2014,” reads one of the prayers sought by Ms Maina.
Commissioner of Insurance and IRA chief executive Sammy Makove, through the firm of Milimo Muthoni advocates, moved to court and obtained orders on July 4 extending the term of the statutory management by six months.
The commissioner in his request for extension had argued that the process of firm’s turnaround is ongoing and the extension would help shareholders comply with revival conditions which include a cash injection of Sh600 million.
The extension effectively froze the revival of the insurer as making of any claim by creditors and policyholders until January next year.
Ms Maina in her petition claims that the new agency’s legal mandate is only to protect the interest of policyholders of an insolvent insurance company, thus exposing her as creditors to potential loss.
Blue Shield was put under statutory management in September 2011. It was given a clean bill of health by its statutory manager early this year.
The statutory manager submitted a report on the state of the company to IRA in January proposing the underwriter’s revival subject to conditions that shareholders were to meet.
According to the statutory manager report on the financial status of the company, the insurer that was underwriting motor vehicle risks had, by the time of collapse, a shortfall of Sh23 million in liquid capital and Sh597 million in solvency thresholds.
The company has outstanding claims amounting to Sh2.2 billion. Other creditors are owed Sh200 million, coupled with Sh100 million in unpaid taxes.
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