The curatorship of funerals cover insurer 3Sixty Life hangs in limbo along with the company's future as the process, which has dragged on for more than two years already, still awaits the completion of annual financial statements, including awaited court judgements, which are all unlikely to lead to resuscitation without recapitalisation or liquidation.
This is as 3Sixty Life Group CEO Khandani Msibi this week said the group was contemplating approaching the courts to have the final curator, Fagmeedah Petersen-Cook, removed as she had not succeeded in her work but had been a drain through the curatorship fees paid.
Msibi said the business had been doing well under the first curatorship; it made a R60 million profit in the first year of the Covid-19 pandemic and R40m the following year, until the current curator was appointed.
“The curatorship is a fuss, it only serves to enrich the curator. Now that we have moved business to African Unity, it is making a loss. We will approach the courts to show that there is no need for a curator. It has been two and a half years,” Msibi said.
“The SA Reserve Bank took a business owned by shareholders and put it under curatorship for more than two years. This should not have taken more than six months, but they are embarrassed that they were at fault.
“The curatorship stops you from selling the business, everything is static and there are excessive curatorship costs.”
The process has been worsened by the transfer late last year of Doves Funeral Services’ underwriting business to African Unity Life following delays, including the finalising of the 2020 annual financial statements.
Petersen-Cook yesterday said there have been additional delays to the delayed 2021 audit, including that in September last year the outsourced service provider for accounting services locked management and the auditors out of the accounting software.
The company’s outsourced service provider has also gone into liquidation this year, and the accounting function has been internalised.
“The curator has needed to attend to the various internal operational deficiencies, appoint competent and appropriately qualified staff and address the market conduct issues identified in the curatorship application,” Petersen-Cook said.
“The business still does not appear to have the solvency reserves required for an insurance company and will ultimately need to be recapitalised in order for there to be any prospect of the business exiting curatorship.”
Petersen-Cook said the process has experienced continuous disruption, starting with the delay of the 2020 audit, which had a disclaimer opinion, as well as the appointed outsourced actuarial service provider and outsourced accounting and finance service provider.
“We expect to finalise this fairly shortly. The 2022 and 2023 annual financial statements and solvency reporting needs to be prepared next and then audited,” she said.
“Once these have been completed, the solvency shortfall can be reported on with the necessary assurance. If the business is recapitalised, the market conduct issues resolved, and the internal controls implemented, the curator can recommend to the Prudential Authority (PA) that it applies to the High Court to have the curatorship uplifted.
“The High Court will adjudicate the matter. If it is impossible to remedy the insolvency by recapitalisation, the curator could recommend to the PA to place the business in liquidation.”
Doves Group in December announced concluding an underwriting partnership with African Unity Life which it said marked a significant milestone in its journey towards revitalisation and growth, following challenges posed by the curatorship of 3Sixty Life.
BUSINESS REPORT