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KUWAIT CITY, Oct 6: Informed sources suggested that the Insurance Regulatory Unit and some creditor sector companies will request to open bankruptcy procedures against four insurance companies, to guarantee the rights of creditors, policyholders and shareholders, noting that the bankruptcy of insurance companies may be subject to increase, reports Al-Qabas daily.
The sources said according to the IRU and bankruptcy laws, the executive regulations and amendments, each of the supervisory authority represented by the unit and the company’s creditors – creditor insurance companies and others – has the right to request opening settlement procedures, preventive restructuring or declaring bankruptcy.
The sources indicated that the decision issued by the unit at the end of last week regulated the method of calculating the minimum value of the application for opening settlement procedures, preventive restructuring or declaring bankruptcy in the insurance market.
The decision stipulates that the minimum order for opening preventive settlement procedures, restructuring or bankruptcy for insurance and/or reinsurance companies is calculated according to two equations:
1 – Equity value (according to the latest interim revision or audited annual financial statements submitted to the unit or when there is any change therein) x Fixed ratio (equal to 5%)
2 – The value of the paid-up capital (according to the latest audited or audited annual financial statements submitted to the unit or whenever there is any change in it) X a fixed percentage (equal to 5%) The sources pointed out that the companies expected to apply for bankruptcy procedures have over the past years burned the prices of insurance policies and refrained from implementing judicial rulings to compensate policy holders.