FOUR KUWAITI INSURANCE FIRMS FACE BANKRUPTCY

  • 07/10/2022

Kuwait City: According to reliable sources, the Insurance Regulatory Unit will ask for the opening of bankruptcy proceedings against four insurance companies in order to protect the rights of creditors, policyholders, and shareholders, noting that the number of insurance company bankruptcies may be on the rise.


According to the sources, each supervisory authority represented by the unit and the company's creditors, including creditor insurance companies and others, have the right to request the opening of settlement procedures, preventive restructuring, or bankruptcy under the IRU and bankruptcy laws, the executive regulations, and amendments. 

According to the sources, the unit's decision from the end of last week regulated how to determine the minimum amount of the application for initiating settlement procedures, preventive restructuring, or declaring bankruptcy in the insurance market.

According to the ruling, two equations must be used to determine the minimum order for starting preventive settlement procedures, restructuring, or bankruptcy for insurance and/or reinsurance companies:

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 (5% equivalent)

2 - The value of the paid-up capital multiplied by a fixed percentage (equal to 5%), as determined by the most recent audited or annual financial statements submitted to the unit. The sources noted that over the previous years, the companies anticipated to file for bankruptcy procedures burned the prices of insurance policies and refrained from enforcing court orders to compensate policyholders.

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