Elite Insurance Company Limited (in Administration) - Background and FAQs

Elite was established in Gibraltar in 2004 to offer insurance products in both the commercial and retail markets across Europe. Elite was authorised to carry out business in Belgium, France, Germany, Greece, Ireland, Luxembourg, Malta, Netherlands, Norway, Portugal, Romania, Spain and the UK. Elite was also authorised to carry out business on a branch basis in France, Italy, Spain and the UK.

The Company was a specialist in after-the-event legal expense insurance and also had a wide range of policy covers including French construction, Italian and Spanish surety bonds, Greek, Irish and UK motor and UK professional indemnity, pet and warranty policies. A significant majority of the insurance business underwritten by Elite was reinsured by CBL Insurance Limited (“CBL”).

On 4 July 2017, Elite ceased to be authorised to enter into new contracts of insurance or renew existing contracts of insurance. In January 2018, a specialist run-off provider acquired Elite.

In November 2018, CBL entered liquidation and this matter, together with continued reserve deterioration experienced in a number of business lines as well as issues with the collection of some of the assets base, has led to the Company becoming balance sheet insolvent.



Background and FAQs - updated 11 December 2019

Questions

Answers

What is an Administration?

An administration is an insolvency procedure, where individual insolvency practitioners take charge of the company’s business and affairs with a view to pursuing certain objectives.The objectives are as follows:

  • rescuing the company as a going concern; or
  • achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in Administration); or
  • realising the company’s assets to pay a dividend to secured or preferential creditors.
When and why did Elite go into Administration?

On 11 December 2019 Elite went into administration.

This follows a sequence of events including in February 2018, Elite’s major reinsurer, CBL entered interim liquidation and subsequently liquidation in November 2018. This matter, together with continued reserve deterioration experienced in a number of business lines (as well as issues with the collection of some of its assets base) rendered the Company balance sheet insolvent.

Who are the Administrators? The Joint Administrators are Dan Schwarzmann a Partner of the UK firm of PricewaterhouseCoopers LLP and Edgar Lavarello a Partner of the Gibraltar firm of PricewaterhouseCoopers Limited.
Why is the Gibraltar PwC firm involved? Elite is a company registered in Gibraltar. It was incorporated in 2004.
What do the Administrators do?

Administration is one of a number of formal insolvency procedures.

There are three entry routes into administration, each of which appoints an Administrator.

  • By an order of the court
  • Appointment by a qualifying floating charge holder.
  • Appointment by the company or its directors.

Administration stops any legal action or process against a company from proceeding, unless the Administrators or the Court give permission. This means that creditors can’t take legal action against a company in administration to recover outstanding amounts.

What’s the difference between Administration and liquidation?

An administration is an insolvency procedure, where individual insolvency practitioners take charge of the company’s business and affairs with a view to pursuing certain objectives. It stops any legal action or process against a company from proceeding, unless the Administrators or the Court give permission. This means that creditors can’t take legal action against a company in administration to recover outstanding amounts.

The administrators are legally obliged to act in the best interests of the company’s creditors. They will formulate a recovery plan for the business (in the creditors’ best interests) before proposing their plan to the creditors at a creditors’ meeting.  The insolvency practitioner establishes a timeframe for the administration and implements restructuring measures to:

  • improve the company’s position; or
  • maximise the best result for creditors as a whole; or
  • pay a dividend to secured / preferential creditors  

A liquidation is the process of closing a company with debts. It involves the realisation of all company’s assets to pay off as many creditors as possible, in preferential order determined by the insolvency practitioner, before dissolving the company completely.

Liquidation and administrations are both formal insolvency processes. The primary difference between the two processes is that if successful, an administration can lead to a complete recovery of the business.  However, given Elite's financial status this is extremely unlikely and administration has been chosen as it provides greater potential flexibility in seeking to maximise the best for creditors as a whole. 

What is the company's principal business? Elite wrote general insurance business, primarily through intermediaries, including motor, general liability, professional indemnity, warranty, legal expenses (including after-the-event), construction defect policies and surety bonds.
Where is Elite based? Are there offices overseas? Elite is domiciled in Gibraltar with operations run from the UK.
What will happen next? The Administrators will initially review the company’s position and collect information about the company. The Administrators will take over the day to day control and management of the company.
What is the current position?

The company is in run-off; claims are still being handled and where appropriate local compensation schemes may protect policyholders and pay at least a proportion of their claims.

The Administrators are working to find the best result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in Administration).

I am owed money, what notification will I receive?

The Administrators will write to all known creditors of the company (as recorded by the company) as soon as is reasonably practical to inform them formally of the appointment.

The Administrators will send a report to all known creditors within 60 days of appointment. This report is known as the Administrators’ proposals and will outline steps taken by the Administrators to date and the strategy going forwards.

The Administrators are also required to provide a written update on the administration to all known creditors every 6 months.

I am an existing policyholder, what happens to my policy? Your policy is still in force. The Administration of Elite does not automatically terminate or cancel your contract of insurance (unless specifically provided for in your policy). More information will follow as and when further steps are taken by Elite.
I want to make a new claim, what should I do now? For the time being, policyholders should continue submitting their claim following the usual processes.
Can you provide me with an estimate of the timeframe for reviewing my claim? The administration process is complex and it takes time to assess the company’s position and provide an estimate of the timing for reviewing claims and making a distribution.  The Administrators will include an update on claims and, if possible, a timeframe asap.
As an existing policyholder, do I need to take any action? As existing policies remain in force, no action is required at this stage.
Can I cancel my policy with Elite? Do I have the right to a refund of my premium?

The terms and conditions under your existing policy remain applicable. Please look at your policy documentation in relation to cancellation.

Policyholders should take their own advice as to their next course of action and whether they wish to cancel their policies or not, taking into account the provisions of local compensation schemes.

Policyholders are reminded that should they cancel their policies, depending on the terms of the policy wording, it is possible that either the full or a pro-rata premium reflecting ‘time on risk’ may still be payable to Elite and that there may not be a right to the refund of any premium. Policyholders should carefully check their policy wording and, as appropriate, take professional advice before cancelling their policies.

Brokers, agents and other intermediaries are also reminded that if policies are cancelled by policyholders, there may be an obligation to pay Elite any return commissions that may be due to Elite in full, upon the cancellation of policies.

I have an existing claim, what happens to this?

The status of your claim will be considered by the Administrators including whether there is any local compensation fund involvement. UK Policyholders are usually able to access statutory compensation funds, subject to their eligibility criteria.

In the circumstance where a claim is being made against you by a third party and Elite or its appointed agent continues to defend the claim on your behalf, any costs incurred by Elite in defending the claim on your behalf will be set-off in full against any claim or dividend payment that may be made to you.

Further details can be found on the FSCS website at fscs.org.uk/what-we-cover/insurance/

Am I covered by a compensation scheme?

 

  • Following the Administrators’ interactions with the FSCS, the FSCS are expecting to protect most UK policyholders, subject to their eligibility rules.
  • For UK Compulsory insurance,for example third party motor and employers’ liability, the FSCS will meet Elite’s liability for claims in full with no limit.
  • For all other insurance, with certain exceptions, cover will be at 90% of Elite’s liability for claims. It is a condition of receiving compensation that the FSCS takes an assignment of the policyholder’s rights against Elite.
  • Policyholders will have to bear the 10% not covered by the FSCS as well as any excess under the policy.

 

Further information FSCS compensation FSCS compensation is applicable to policyholders who are private individuals or small businesses or partnerships. Generally, firms with an annual turnover of £1m or more will not be eligible. Neither will policyholders who are themselves authorised Financial Services firms. However, for general contracts of insurance that are compulsory, usually all firms are eligible, regardless of size or authorisation status.
I am a UK policyholder - How do I make a claim for compensation? The Administrators are working with the FSCS on a compensation process for the affected eligible policyholders.
I am a non-UK policyholder - How do I make a claim for compensation? Following a review of the French compensation scheme, it has been confirmed that there will be no compensation available to French policyholders. More information can be found here.

We are assessing compensation schemes in other jurisdictions, but we are currently not able to confirm if any cover will be available.
Will my claim get paid in full? Whilst at this time it is not possible to predict the proportion of each policyholder’s agreed claims that will ultimately be paid by the Company, we are in the process of establishing policyholders’ protections under relevant compensation schemes.
I am a Managing General Agent/broker/third party administrator, am I going to be paid for claims handling services?

We appreciate your ongoing cooperation as the Administrators work to develop a detailed understanding of third party claims handling arrangements.

We are reviewing situations on a case by case basis. If you are expecting to incur significant costs in the interim please share this information with us in order that a practical and commercial decision can be taken by the Administrators in a timely fashion. You should send the information below to Elite-insurance.uk@armourrisk.com

  • full name
  • address
  • telephone number
  • your query

Email addresses:

I am a broker, agent, intermediary or coverholder and I may be holding monies that may be due to Elite. What should I do?

You should contact the Company immediately if you may be holding any premiums, recoveries or other amounts that may be due to Elite.  Such amounts should not be paid to or passed back to other parties (e.g. policyholders) until the legal entitlement to such monies can be determined.  Elite will rigorously pursue or take legal action to recover any monies that are due to Elite.

Intermediaries should not operate any net accounting of client monies and should hold monies in designated, segregated client accounts and pay any monies due to Elite in full, without set-off or deduction.

I am a broker, agent, intermediary or coverholder what course of action can I take?

None at this stage. The Administrators will initially review the company’s position and collect information about the company. The Administrators will take over the day to day control and management of the company.

The Administrators will write to all known creditors of the company (as recorded by the company) as soon as is reasonably practical to inform them formally of the appointment.

The Administrators will send a report to all known creditors within 60 days of appointment. This report is known as the Administrators’ proposals and will outline steps taken by the Administrators to date and the strategy going forwards.

The Administrators are also required to provide a written update on the administration to all known creditors every 6 months. This report will be sent within one month of every 6 month anniversary or earlier if an Administrator vacates office or an extension to the administration is granted.

Who do I contact with any problems or questions?

UK & Other: Elite-insurance.uk@armourrisk.com
France: Elite-insurance.fr@armourrisk.com
Italy: Elite-insurance.it@armourrisk.com

UK & Other +44 (0)207 129 8147
France +44 (0)207 129 8661
Italy +44 (0)207 129 8663

This FAQ document/website will also be updated over time and it is recommended that interested parties should check for any updates prior to contacting the helpline.

Please refer to our website at pwc.co.uk/elite-insurance as this will be updated from time to time.

You can also contact the Administrators at the email addresses below:
uk_elite@pwc.com

If claims are not paid, this will result in demonstrable hardship to the policyholder or third party claimant. What are the criteria for support? 
We are working closely with the FSCS in the UK to ensure we put the appropriate measures in place to support creditors. In the interim, please share details of the claim of interest for us to consider. You should send the information below to Elite-insurance.uk@armourrisk.com
  • full name
  • address
  • telephone number
  • your query

Supplier related

I am a supplier to Elite Insurance Company Limited, will I be paid for services provided?

For suppliers, we will ensure payment for any goods and services authorised by the Joint Administers provided from the date of appointment (11 December 2019).

In relation to any payment arrears, we will review any outstanding payments on an individual basis. These will likely be claims in the administration process. The joint administrators will be writing to you to explain the consequences of the administration and your rights as a creditor. It is too early to estimate the likely dividend level.

Should I continue providing services or supplies after the date of the administration and how do I know I will be paid? The company will pay for goods and services rendered to the business after the date of our appointment as Administrators against an appropriately authorised purchase order or letter of commitment.
How do I get a letter of commitment? In relation to ongoing services, we are able to issue a letter of commitment to provide suppliers further assurance for the payment of their goods and services. If they require such a letter, please provide the following details to us and we will send them a letter as soon as possible:
  • Name of supplier contact
  • Email address of supplier contact
  • Name of supplier company
  • Name of entity (or entities) with which their services are contracted
You can email:
Who should I raise any invoices to, specifically if new Purchase Orders (PO's) need to be raised?
  • Invoices should be raised to the same legal entities (with the terms 'in administration' in addendum) and raised via the same systems.
  • Purchase orders can be raised via the same systems and processes.
  • Existing purchase orders for post administration goods/services remain valid; you should invoice only for those goods/services provided from 11 December 2019.
Who do I pay outstanding balances to?
Any outstanding balances can currently be paid in the normal way to the Company.
Who should I contact with regards to registering outstanding payments? Please send suppliers statements and invoices to your usual contact in the Group.
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