Stakeholders should know how troubled FWU Life Insurance Lux S.A. (FLL) plans to turn itself around within a month.
The insurer has submitted a “short-term financing plan” to the Supervisory Authority for the Insurance Sector (CAA) that aims to “bring eligible core capital back to the [minimum capital requirement] level within three months,” according to the Luxembourg Insurance and Reinsurance Association (Aca).
The plan is currently being reviewed by the CAA and the regulator should render its judgement by 19 October, Aca on 19 July 2024.
that it no longer met minimum capital and solvency capital requirements after its parent, FWU AG, filed for insolvency in Munich.
A Luxembourg court granted FLL’s request to freeze payments to clients on 2 August 2024, “for a maximum period of six months,” Aca said on Thursday. “If the suspension of payments does not rectify the situation… or the FLL’s situation is weakened to the point that it will no longer be able to meet its commitments, then a request for compulsory liquidation could be made by the CAA or the public prosecutor’s office.”
Paperjam asked FWU and the law firm Pluta Rechtsanwalts, its insolvency administrator, for comment.
“This is only the second Luxembourg insurance undertaking to experience such difficulties, the first being Excell Life International S.A. (Excell Life), which was placed into judicial liquidation following a judgment on 12 July 2012 and had its authorisation to conduct insurance business withdrawn by ministerial order of 5 June 2012,” Molitor Legal in a client note on 13 August 2024.
Triangle of security
“The current procedure has been following a strict application of the triangle of security” system, Aca said.
The triangle of security, or triangle of protection, “mechanism is based on the deposit of technical reserves (the term used to describe the assets invested using premiums paid by policyholders) with a bank approved by the CAA, under a ‘tripartite’ deposit agreement drawn up strictly in accordance with the terms laid down” and supervised by the CAA, the law firm DSM in a client note on 27 August.
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“If FLL is wound up, this could well lead to the very first practical implementation of the triangle of security,” Molitor Legal observed.
Consumer information
FLL insurance clients with questions can consult the or contact the regulator via QA_FWULife@caa.lu.