The Insurance Authority (IA) has invoked powers under the Insurance Ordinance (IO) to appoint managers to take full control of the affairs and property of Tahoe Life Insurance Company, the regulator said in a statement on 26 July 2024.
“The IA has applied a series of supervisory interventions on Tahoe Life since mid-2020 to protect policyholders while urging its management team and majority shareholders to identify a viable solution to resolve the issues arising from investments linked with related party transactions,” an IA spokesperson said in the statement.
Despite advisors having been appointed under the IO in August 2023 to provide Tahoe Life with recommendations and guidance, the company has failed to submit audited financial statements in respect of 2022 and 2023, to deliver on promises to bring in new strategic investors and to improve on its corporate governance. “Given that its majority shareholders are embroiled in multiple debt proceedings, the appointment of the managers is necessary to ascertain the latest financial and solvency position, preserve capital resources, and identify optimal recovery solutions in the best interest of policyholders,” the spokesperson added.
“Previous ring-fencing measures imposed by the IA have reinforced the ability of Tahoe Life to meet its insurance obligations. We would like to remind the general public that since life insurance products are designed to reach maturity over a fairly long period of time, policyholders are advised to carefully assess their own circumstances and avoid making hasty decisions.”
All policies issued by Tahoe Life will not be affected since the managers are responsible for maintaining a full range of business operations covering customer service, premium payment, and claims settlement. The managers appointed are Mr Derek Lai and Mr Forrest Kam of Deloitte Touche Tohmatsu as well as Mr Oliver Cheng of Deloitte Advisory (Hong Kong).
Bermuda Monetary Authority
Further to the appointment of managers by the IA on 26 July 2024, the Bermuda Monetary Authority (BMA) announced on 27 July the appointment, by order of the Supreme Court of Bermuda of Joint Provisional Liquidators (JPLs) of Tahoe Life in a coordinated regulatory action with the IA to protect policy holders’ interests.
“Since Tahoe Life is incorporated in Bermuda, the IA has all along been coordinating with the BMA on any regulatory actions against Tahoe Life. The appointment of the JPLs serves to ring-fence the assets of (rather than to wind up) Tahoe Life for the protection of the policyholders’ interests,” said an IA spokesperson.
Securities and Futures Commission (SFC)
The Securities and Futures Commission (SFC) and the IA have joined forces to tackle suspected irregularities concerning the investment portfolio of Tahoe Life.
The announcement made by the IA on 26 July on the appointment of managers to take full control of the affairs and property of Tahoe Life represents the outcome of patient and assiduous work done over the past four years.
Back in May 2020, the IA sought assistance from the SFC on information regarding certain investments made by Tahoe Life. Subsequent inspections carried out by the SFC on a few licensed fund managers revealed that the assets in question held by Tahoe Life were channelled into financial instruments linked with a related party in mainland China.
The SFC launched its own investigations, and conducted a joint operation with the IA on an SFC-licensed fund manager in June 2021, the first of its kind since the two regulators signed a Memorandum of Understanding (MoU) in September 2020. The SFC subsequently took disciplinary action against the fund manager.