The Insurance Authority (IA) appointed managers to take full control of the affairs and property of Target Insurance Company Limited (Target) on 7 January 2022. Pursuant to the IA’s press release, the IA took this action to maintain market stability and protect policy holders’ interests, on the grounds of (1) Target’s potential breaches of statutory requirements relating to its investment activities and asset allocation and (2) potential deficiencies in Target’s corporate governance. The management of Target denies these allegations, according to news reports.
The IA’s power to appoint managers is provided under section 35(2)(b) of the Insurance Ordinance (Cap.41) (IO). Under the IO, the IA may only invoke such powers when, among others:
The IA’s regulatory powers over insurers under the IO also include:
It is the first time that the IA exercises its power to appoint managers since its establishment in 2015. Insurers should pay close attention to developments in this case as this may set a precedent for IA’s approach to exercise such powers in future.