3Sixty Life has registered its intention to appeal against the High Court’s decision to place the underwriter under final curatorship.
The High Court also cancelled the appointment of Yashoda Ram as 3Sixty Life’s curator and appointed Tinashe Mashoko as the final curator.
But, in a statement on Tuesday, Ram said that in light of 3Sixty’s application for leave to appeal, the High Court’s order was suspended, and accordingly, 3Sixty Life remains under provisional curatorship and she is still the interim curator.
In a judgment handed down on 30 September, the High Court in Johannesburg found that 3Sixty Life had not “meaningfully addressed the statutory breaches or governance issues” that resulted in the provisional curatorship order at the end of last year.
In a statement following the decision, 3Sixty Life said it believed Judge Fiona Dippenaar had “erred” in several of her findings.
“While the case is a complex one, the company believes no consideration was given to the fact that it has satisfied conditions set by the PA [Prudential Authority] to discharge the provisional order of curatorship,” 3Sixty Life said. “The court also failed to consider the internal recapitalisation plan that would satisfy minimal capital requirements.”
Judge Dippenaar did not make any findings relating to the dispute between Ram and her former employer, BDO, or what the judge called “her issues” with the PA.
In February, the PA launched an application to replace Ram with Mashoko on the basis that Ram had allegedly misrepresented her qualifications. At the time of her appointment, Ram was the head of actuarial services at BDO.
Judge Dippenaar said it would not be in the interests of 3Sixty’s policyholders if Ram’s appointment as curator was confirmed, “considering Ms Ram’s conduct in relation to this matter and the level of hostility which currently prevails between her and the Authority”.
Business Day quoted the PA as saying that it intends to oppose 3Sixty Life’s appeal application and remains of the view that the curatorship of 3Sixty Life is in the best interests of its policyholders.
“By virtue of the appeal, Ms Ram remains the curator of 3Sixty Life. We are taking legal advice and considering bringing an application to put certain parts of Judge Dippenaar’s order immediately into operation,” the PA said.
Final order
3Sixty Life was placed under provisional curatorship in December last year following an ex parte application by the PA on the grounds that 3Sixty did not meet the capital and solvency requirements of the Insurance Act.
The final curatorship order was opposed by 3Sixty Life, the National Union of Metalworkers of South Africa (Numsa) and Ram.
The Numsa Investment Company owns the 3Sixty Global Solutions Group, which owns the Doves Group, which owns 3Sixty Life.
3Sixty said the interim curatorship order should not have been granted, claiming the PA had misled the court in its curatorship application. Judge Dippenaar dismissed this argument.
3Sixty argued that continuing the curatorship would prejudice it and its policyholders, referring to conclusions and recommendations made by Ram.
Regulatory and governance problems
Judge Dippenaar said regulatory breaches and governance and liquidity issues at 3Sixty led her to conclude that there were “problems in the business of 3Sixty” and the concerns raised by the PA were legitimate.
According to Judge Dippenaar, the following were “undisputed”:
- 3Sixty’s 2020 financial statements have still not been audited and submitted to the PA.
- 3Sixty’s minimum capital requirement (MCR) and solvency capital requirement (SCR) were below the required threshold for “a considerable period”, and it was unable to effect a recapitalisation plan, despite several indulgences granted to it by the PA.
- 3Sixty’s SCR fell below the minimum in November 2020 and its MCR followed suit shortly thereafter.
3Sixty has, for more than a year, failed to maintain a financially sound condition as required by section 36 of the Insurance Act. “No countervailing evidence was presented by 3Sixty to the Authority’s evidence that it is insolvent,” the judge said.
Numsa applies to intervene
Numsa applied to intervene in the case on the grounds that a significant number of 3Sixty’s policyholders are Numsa members and are indirect shareholders of 3Sixty.
3Sixty underwrites life and funeral policies that are sold by Numsa Financial Services (NFS) to Numsa members. NFS accounts for 26% of 3Sixty’s policyholders by premium income, according to Numsa’s application.
Judge Dippenaar dismissed Numsa’s application, saying it had not demonstrated a direct and substantial interest in the case.
