IBC questions financial affairs of ICBC (October 01, 2001)

Following disclosure by Insurance Corporation of British Columbia (ICBC) chair Nick Geer of an expected $150 million loss for the current financial year, the Insurance Bureau of Canada (IBC) has called on the B.C. provincial government to conduct an independent financial review of the crown insurer. ICBC is operated by the provincial government and therefore not subject to minimum asset testing applied by regulators to private insurers.

IBC regional vice president Lindsay Olson questioned how ICBC had been able to earlier this year declare a surplus and issue $100 rebate cheques to all B.C. drivers. She implied that this may have been a political maneuver by the province’s previous National Democratic Party (NDP) government before the provincial elections took place – which the NDP lost to the Liberal Party. “This also came on the heels of an unprecedented expansion of ICBC’s mandate and staff budget, and the creation of a $2 million downtown executive office. Now, we’re seeing the result, financial losses, staff reductions and confirmation that the rebate cheques were a pre-election gimmick by the NDP.”

Olson says the new Liberal government has an obligation to the voting public to investigate the true state of ICBC’s financial affairs. Taxpayers will be responsible for any financial shortfall at ICBC, she adds. “This announcement [ICBC’s expected loss] raises concerns about the adequacy of ICBC’s reserves, especially in light of the ongoing and unprecedented reduction of claim reserves under the previous government.” –

8www.canadianunderwriter.ca CANADIAN UNDERWRITER / OCTOBER 2001

disclosure by Insurance Corporation of British Columbia (ICBC) chair Nick Geer of an expected $150 million loss for the current financial year, the Insurance Bureau of Canada (IBC) has called on the B.C. provincial government to conduct an independent financial review of the crown insurer. ICBC is operated by the provincial government and therefore not subject to minimum asset testing applied by regulators to private insurers.

IBC regional vice president Lindsay Olson questioned how ICBC had been able to earlier this year declare a surplus and issue $100 rebate cheques to all B.C. drivers. She implied that this may have been a political maneuver by the province’s previous National Democratic Party (NDP) government before the provincial elections took place – which the NDP lost to the Liberal Party. “This also came on the heels of an unprecedented expansion of ICBC’s mandate and staff budget, and the creation of a $2 million downtown executive office. Now, we’re seeing the result, financial losses, staff reductions and confirmation that the rebate cheques were a pre-election gimmick by the NDP.”

Olson says the new Liberal government has an obligation to the voting public to investigate the true state of ICBC’s financial affairs. Taxpayers will be responsible for any financial shortfall at ICBC, she adds. “This announcement [ICBC’s expected loss] raises concerns about the adequacy of ICBC’s reserves, especially in light of the ongoing and unprecedented reduction of claim reserves under the previous government.” –

8www.canadianunderwriter.ca CANADIAN UNDERWRITER / OCTOBER 2001

Sale of Queensway’s U.S. operations halted

A previously announced deal to sell the remaining insurance properties of troubled Queensway Financial Holdings has run aground. In a press release, Queensway announces that the deal to sell its U.S. insurance companies to Argonaut Group “has been terminated”. Reasons for the sale’s failure were not given, although in an earlier statement Queensway had alluded that if the sale price were not satisfactory, the deal would be folded. Queensway estimated a value of the operations in excess of US$40 million, which includes North Pointe Financial Services, Hermitage Insurance Co., Consolidated Property & Casualty Insurance Co. and Universal Fire & Casualty Co. The companies in question account for about 83% of Queensway’s assets.

The Canadian-based holding company has been in the process of selling off its operations, having announced the sale of its Canadian insurer, Coachman, to Saskatchewan Government Insurance, and the resignation of its board of directors. The Coachman sale, as well as the earlier sale of Queensway’s Atlantic Fidelity and Surety Co. to The Guarantee Co. of North America, are not affected by the U.S. announcement.

Interim receiver Ernst & Young says that despite the termination of the Argonaut purchase, “discussions have been advanced with several interested purchasers for certain of the insurance companies”. E&Y adds that senior lenders and state insurance regulators are also involved in the process and ensuring the companies continue to operate normally despite the sell-off.