The acting CEO of 3Sixty Life, the embattled insurance company of the National Union of Metalworkers of SA (Numsa), has accused the Prudential Authority (PA) of worsening their financial position unnecessarily by dragging it into provisional curatorship.
This comes as the Johannesburg high court on Tuesday held the last hearing on 3Sixty Life’s curatorship application before it decides whether to place the company under full curatorship.
Khandani Msibi has slammed how politics, his internal company loans within the 3Sixty Group (3SG) and his relations with Numsa general secretary Irvin Jim have been dragged into the insurance company’s financial problems that saw it being placed under interim curatorship in December.
He said 3Sixty had suffered financially as the result of the provisional curatorship as it had been losing clients. “We lost two clients that make up 20% of our business but the fortunate thing is that 80% of our business is from internal clients and they don’t move,” he said.
Msibi insisted that the 2019 Deloitte report had “died” as he had responded to it and explained why some of the companies within Numsa’s investment arm had been getting questionable funding from 3Sixty Life before it faced solvency problems.
“All companies have inter-company loans. When you run a group of companies you do have inter-company loans and there is no law that says you cannot have them,” he insisted.
He said Deloitte “was just unhappy with the robustness of the agreements” as he stated that all the insurance companies within the 3Sixty Group were closely connected with 3Sixty Life as the underwriter of their products.
These included Doves Group and Numsa Financial Services (NFS).
Msibi said the PA could not pinpoint wrongdoing in relation to the inter-company transactions that had taken place within 3Sixty Group.
He said he had been upfront that Jim’s R40,000 birthday party and the funding of several Numsa events had been part of marketing as this exposed the insurance company to its members where it was most dependent.
“We still have to work hard through marketing to get these members and all insurance companies do marketing like we do. This is just diversion and petty politics,” he said.
He disputed allegations that 3Sixty Life was running into financial problems before the Covid-19 outbreak, which resulted in a surge in insurance claims and plunged the company into insolvency.
“The solvency crisis happened as a result of Covid-19 and it happened in the 2020 December period. We have run that business for 10 years and we have never had a solvency crisis.
"They are trying to locate this thing within the Deloitte report because if it is located within Covid-19, even the public will ask questions about their action,” he said.
Msibi said while the group had not succeeded in its bid to sell one of its subsidiaries, Salt, to help in the recapitalisation effort for 3Sixty Life, the group had looked into its property portfolio that included funeral homes amounting to about R130m as an alternative.
3Sixty Life provisional curator Yashoda Ram has maintained in her provisional report that the PA had failed to undertake due diligence after receiving the internal recapitalisation plan by Msibi, which could have seen curatorship avoided.
Ram said, if permitted by the court, the recapitalisation plan “will restore the minimum amount of capital required to be held to be considered to meet regulatory capital requirements to continue operating as an insurance company”.
Msibi said he was convinced that the court would have little basis not to reverse the curatorship.
In her January replying affidavit on behalf of the PA in the court battle, SA Reserve Bank head of banking and insurance Suzette Vogelsang said 3Sixty Life management and directors “continued to disregard their fiduciary duties and responsibilities of acting in the best interest of policyholders and the capital held to operate the insurance licence was perpetually not sufficient”.
Vogelsang said 3Sixty Life had been given 12 months to restore itself to a stable financial position but that its financial position worsened before the move to place it under curatorship in December.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.