Lion of Africa Insurance winds down operations voluntarily
Lion of Africa Insurance announced last week that the company was being placed into 'run-off'.
Lion of Africa Insurance, which is owned by JSE-listed empowerment company Brimstone, announced last week that it would be winding its operations down voluntarily.
Over the last few years, Lion of Africa Insurance has seen a lack of profitability and a tough operating climate in its chosen markets.
Their last published financials for the year to December 2016 showed the company’s loss ratio was 66 percent. The previous year it was in excess of 100 percent.
A turnaround strategy, launched in 2015, showed improvement in a progress report published in 2017. Their net loss had reduced after tax to R15.4 million in 2016 from R191.5 million in 2015. However, this was not enough to secure the insurance company’s future.
Says Mustaq Brey, Brimstone’s chief executive:
“The decision was not taken lightly and significant efforts were made to find alternative solutions. Lion will continue to meet all obligations under existing policies but will not be issuing any new policies. While the decision to place Lion into run-off is regrettable, its value to Brimstone comprises less than 1 percent of Brimstone’s gross asset value.”
The short-term insurer will halt its operations with immediate effect.
“Although the decision to place Lion into run-off was based on sound business rationale, it was still a particularly difficult decision to make which was only considered once all other viable options had been explored and exhausted,” said Brimstone chairperson Fred Robertson.
“Brimstone will continue to provide support to Lion, its leadership team, and staff during this difficult time. All other stakeholders including the regulatory authorities, Lion’s clients and counterparties will be kept fully informed as the process unfolds.”
The company said it had already informed its staff and the insurance regulator of its decision.