FIS Faces Closure

THE Namibia Financial Institutions Supervisory Authority (Namfisa) has decided to revoke FIS Life Assurance Company’s trading licence, after a tiff which has lasted nearly a decade.

Adding to FIS’s woes is a decision by the Ministry of Defence to discontinue its relationship with the company, which has been providing its members with insurance cover since 2004.

This means FIS, the only wholly-owned Namibian company with a black majority shareholding, will lose more than N$20 million annually in revenue

FIS is left with the Police Special Field Force contract for insurance cover as a major contract, but this too could be lost if Namfisa has its way.

Defence permanent secretary Petrus Shivute confirmed to The Namibian last week that the military had discontinued its contract with FIS last month.

Shivute said, in the meantime, the defence ministry has appointed Hollard Insurance to provide the army with funeral cover for a six-month period until the military establishes its own company to take over the portfolio.

Sources said FIS was elbowed out of the contract by the defence industries company, August 26 Holdings in partnership with Hollard Insurance.

The move allegedly came after Namfisa copied the Ministry of Defence a letter to FIS informing the company that the financial regulator intended to shut it down.

Although Hollard Insurance spokesperson De Wet Joubert denied that they were forming a company with August 26

Holdings, he said his firm responded to an invitation to bid for the contract last month.

Joubert said information on the alleged partnership was incorrect but that his company was “not at liberty to divulge client information.”

This, he said, is because August 26 Holdings is part of the Ministry of Defence.

August 26 Holdings, which also controversially managed to exclusively secure the army’s catering and food supply contract at the expense of the local catering industry last year, is now set to take over the soldiers’ death, funeral and disability policies.

Sources said, according to the presentation, a joint venture company is to be created in which Hollard Insurance will hold a 75% stake and August 26 Holdings 25%.

Shivute could only confirm that the proposed army insurance firm would be registered soon under Namfisa’s regulatory framework, while defence ministry sources said the company is a joint venture between August 26 Holdings and Hollard Insurance.

The Namibian has learnt that the two companies presented a proposal to the defence ministry a month ago. Part of the proposal is for the Defence Force Foundation to earn a 15% commission on the deal annually.

The soldiers will hold policies with the joint venture company in which Hollard Insurance will act as the under-writer.

Shivute referred questions regarding the presentation and the alleged partnership with August 26 Holdings to Hollard Insurance.

Namfisa last month informed FIS that it had 30 days from 14 May, to make its presentations why the regulator should not strip it of its licence to operate as an insurance company.

According to a Namfisa letter seen by The Namibian, the regulator is accusing FIS of providing disability cover as well as life insurance while it was not authorised to do so. The letter also states that Namfisa had during last December rejected FIS’s application to offer disability benefits and life insurance.

The letter further states that FIS was instructed to stop offering the said benefits as of 6 December 2013. The insurance company was allegedly also instructed to inform its clients that it has stopped offering such benefits and products.

If Namfisa gets its way, FIS will also have to stop providing funeral benefits to the Police Special Field Force.

Namfisa’s dispute with FIS started shortly after the insurance company secured the Ministry of Defence’s contract to provide funeral cover to its members in 2004. FIS accused Namfisa of always shifting the goal posts and Namfisa officials of being part of a bid to shut down the only majority black owned insurance company in Namibia.

The protracted battle ended with a High Court decision to remove FIS from liquidation, which it was placed under by Namfisa last year.

Both Namfisa and FIS could not comment at the time of going to print yesterday.

Source : The Namibian