Global Benefits Group (GBG) collapses after finding ‘many millions of pounds’ of assets did not exist

Global Benefits Group (GBG) Insurance Limited has fallen into administration after a last-ditch bid to rescue the international private medical insurance (IPMI) provider collapsed from a multi-million pound financial blackhole resulting in a shortfall in capital.

Health & Protection has since confirmed that only GBG Insurance Limited, which provides individual and group policies on both a direct and reinsured basis, and administers insurance across the US, Latin America, Europe and certain Asian markets, is in administration.

Administrators have confirmed that GBG Insurance Limited (GIL) will not be renewing or writing any new policies. Other subsidiaries of the GBG group continue to operate and are providing operational support to GIL and other parties.

GBG directors notified the Guernsey Financial Services Commission in March 2023 after they discovered that assets shown in the accounts representing “many millions of pounds” did not actually exist.

The commission said it will be conducting an investigation which was likely to be “complex and lengthy” focused on how the large hole in the firm’s balance sheet developed.

GBG Insurance Limited entered into administration on December 21st 2023

The administration followed a final proposed buyer, which had given the commission and GBG directors the strongest signals that it would buy the business as a going concern, pulling out in mid-December.

Advisers are being warned they may not receive commission for selling some GBG products and to prepare themselves for an influx of queries from clients as GBG has instructed policyholders to contact their broker or agent with questions.

According to updates on the company’s website, GBG Insurance Limited entered into administration on Thursday, 21 December 2023, by order of the Royal Court of Guernsey.

Explaining the reasons for the move, Global Benefits Group said that over the course of 2023, GBG Insurance uncovered historical financial issues which resulted in a shortfall in its capital requirements.

Upon identifying this, GBG Insurance added it sought to conduct an accelerated sale of the business.

It continued that in spite of receiving interest from other companies in acquiring GBG Insurance and its wider group, the sale and recapitalisation of the business could not be completed.

Consequently, the company’s directors concluded that the company was insolvent, with no reasonable prospect of a solvent sale, and applied for GBG Insurance to be placed into administration.

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Global Benefits Group: many millions of pounds that did not exist

The Guernsey Financial Services Commission said it was approached by GBG’s current directors to make it aware that, despite the audited accounts showing the firm to be in good health, it had discovered that assets shown in the accounts representing “many millions of pounds” did not actually exist.

Since that point the Commission said it engaged intensively with the directors as they tried to recapitalise the business and/or secure a sale of the firm, in the interests of policyholders.

According to the Commission, at several points over the last few months while there was a “very strong” prospect that transactions may have been executed that would have protected all policyholders.

The final proposed buyer which had shown strong intent decided to withdraw from the deal in mid-December rather than inject the large amounts of fresh capital required.

The last minute withdrawal from the transaction after some months of due diligence and integration planning, the Commission added, forced the directors of Global Benefits Group to seek administration, other reasonable avenues having been exhausted.

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‘Complex and lengthy’ investigation ahead

The Commission revealed it will be conducting an investigation focused on how the large hole in the firm’s balance sheet developed and why it was not identified more quickly by various parties whom the Commission would expect to have validated the accounting records and other relevant information.

It added this was likely to be a “complex and lengthy investigation” and it cannot predict its outcome.

“We will examine the evidence and endeavour to understand what went wrong,” the Commission said. Adding it “must clearly investigate thoroughly.”

The Commission said it “would not wish the fact of our investigation to lead anyone to draw any adverse conclusions about the current directors of Global Benefits Group.

“At present, we have no evidence to suggest they are not competent people with integrity,” it said.

“The Commission is liaising closely with the joint administrators and a further announcement will be made at the appropriate time,” it concluded.

“complicated and not completely certain”

According to the Commission’s notice, GBG Insurance’s situation is “complicated and not completely certain” as the firm entered administration.

It added that whether or not a policyholder is affected by GBG’s insolvency will depend on whether or not the policyholder is directly insured by Global Benefits Group.

GBG’s global site currently contains information about the administration. While its Latin America site is delivering a 404 error indicating the page requested does not exist, was removed, or deleted.

Teneo insolvency practitioners Alex Adam, Andrew Wood and Michael Tagg have been appointed joint administrators of GBG Insurance Limited.

In August 2022 the insurer appointed Sheldon Kenton as CEO replacing Chris DiSipio.

Source: healthcare and protection .com

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Presentation of Global Benefits Group (GBG)

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Global Benefits Group:

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⇒ Lamp Insurance goes into liquidation