By Stefanos Evripidou
UNCERTAINTY is clouding the insurance sector this week, as MarkeTrends Insurance goes head to head with the Insurance Superintendent’s office, each side making contradictory announcements on the status of the company’s licence.
Chairman of the Securities and Exchange Commission (SEC), Marios Clerides, warned that if the company did not issue a clear statement to its investors clarifying the situation by today, he would suspend trading of shares in the parent company of MarkeTrends Insurance (MI), MarkeTrend Financial Services.
The story goes back to February 24 when MI’s licence expired. According to a new law implemented under the umbrella of EU harmonisation, all insurance companies must renew their licences by the beginning of 2003. Insurance Superintendent, Victoria Natar, informed MI on February 24 that their new application for a licence to offer insurance services had been rejected. The company appealed to the Finance Minister the next day, and he passed on the appeal to the Attorney-general for a legal appraisal.
The plot thickens. MarkeTrends Financial Services (MFS) released an announcement on Monday concerning its subsidiary company. They claimed that then Finance Minister Takis Klerides upheld their appeal on his last day in office, February 28, “and cancelled the decision of the Insurance Superintendent as apparently illegal”. According to the statement, the minister also declared that MI had a valid insurance licence until December 31, 2003.
On the same day, Natar issued a statement maintaining the issue was still under examination and no decision had been taken as regards an insurance licence. She went as far as to say that MarkeTrends’ announcement was not true and “misleading”.
Assistant to the Insurance Superintendent, Melina Katsounodou, told the Cyprus Mail that contrary to what the company was saying, they did not currently hold an insurance licence. “We have not notified the company of any changes to the initial decision we took on February 24. We are collaborating with the new Finance Minister to examine the issue and will inform the company of any decision once we reach one.”
According to Katsounodou, the ex-finance minister left behind a report that did not clarify whether he approved or rejected MI’s appeal, leaving each side to make their own interpretation. All three parties now await the decision of new minister, Marcos Kyprianou.
A Finance Ministry official confirmed that the new minister was still studying the matter, after receiving advice from the Attorney-general on legal points, and would come to a decision shortly.
One financial observer noted that under the new European law, from 2003 onward, insurance licences will no longer have an expiry date but can be revoked by the Insurance Superintendent at any time. This throws into question the new expiry date announced by MFS for the end of the year, which indicates the former minister gave them an extension on their old licence.
Clerides from the SEC said yesterday that if MFS, a listed company, did not clear up the position for investors by today, he would move to suspend share trading until further notice. He said the SEC had been pushing them to make an announcement to investors from last Friday when MI’s licence expired. Clerides did not rule out imposing a penalty on MFS for giving ‘misleading information’ to investors but added that, first, it must be proved that they knowingly mislead the public. “We must find out what went on first,” he said.
Meanwhile, MFS announced the signing of an agreement for the acquisition of 51 per cent of the shares of GAN Direct Insurance Ltd, giving the group a new outlet for insurance contracts. However, the acquisition is subject to the approval of the Insurance Superintendent.
Observers note there will be a strong link between approval of the acquisition and any conclusion on whether MI has a licence or not.
The company has been notified that if it does not get its licence renewed, they will be allowed to receive any outstanding premiums and meet their liabilities until the last day of a contract, which in this case, could go no further than February 24, 2004, said Katsounodou.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
