First Mutual slapped with corrective order

BUSINESS REPORTER

 

The Insurance and Pensions Commission (IPEC) has been instructed by Professor Mthuli Ncube, the Minister of Finance, Economic Development, and Investment Promotion, to issue a corrective order to First Mutual Holdings Limited (FMHL) in response to an investigation into claims that the company violated standard procedures during the assets separation exercise, Business Times can report.

FMHL company secretary Sheila Lorimer confirmed the development in a cautionary statement to shareholders.

In a notice to shareholders on Friday last week, FMHL company secretary Sheila Lorimer, said on December 23, FML received a response from IPEC indicating that the Commission was mandated by Minister Ncube to institute corrective measures.

“ On  April  5, 2022, stakeholders were advised that the Insurance and Pensions Commission (“IPEC” or “the Commission”) intended to perform a forensic investigation on First Mutual Life Assurance Company , a subsidiary of First Mutual Holdings Limited arising from the asset separation exercise initiated by IPEC,” Lorimer said.

She added: “The investigation was completed in February 2023 and the report was submitted to the Minister of Finance, Economic Development and Investment Promotion in accordance with section 67 of the Insurance Act [Chapter 24:07] (“the Act”). In line with the Act, FML submitted representations on the contents of the report to the Minister on 8 June 2023.

“The Corrective Order issued by IPEC is receiving  due attention from the FML board and management. On 21 December 2023, FML received a response from IPEC indicating that the Commission by IPEC is receiving due attention from the FML Board and management.

“As these developments may have a material effect on the company’s securities, shareholders are advised to exercise caution when dealing in the company’s securities pending a full assessment of the implications of the corrective order.”

IPEC states that the asset separation exercise’s goal was to ensure that the legal requirements were followed.

According to IPEC, the goal of these laws pertaining to asset separation was to prevent the transfer of assets from policyholders to shareholders and vice versa.

In order to improve good governance in the insurance and pension sector, the initiative aimed to quantify misallocated assets and assign them to their proper owners while also strengthening compliance with asset separation laws.

 

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