In its annual results, the fund, Maven Income and Growth VCT, discussed the performance of its investment in Elite Insurance which was a key trading subsidiary.
London-headquartered Maven has £415m ($540m, €466m) in assets under management and 12,000 VCT shareholders.
According to Maven’s statement, it had been trying to sell Elite and the business had attracted “a number of high value premium offers” which were in excess of Maven’s expectations. However, Maven said, Elite “subsequently experienced a challenge from its local regulator over its reserving policy in relation to several lines of business”.
Maven said although it had followed the advice of consulting actuaries, and Elite was taking an “internationally recognised” approach to reserving, the company was “forced into a run-off”.
Elite’s move to close to new business “had a meaningful impact on its value” and propelled its sale to a consolidator, Maven said. Bermuda-based Armour Group bought the Gibraltar insurer and its sister company, Elite Business Development, in January this year.
At the time, Elite had been closed to new business since July 2017. The Gibraltar Financial Services Commission (GFSC) said Elite had voluntarily decided to stop writing insurance after it had identified risks arising from Elite’s governance, delegated underwriting and reserving processes.
The regulator said it had been working to make sure that Elite resolved the risks it has identified since the middle of 2016, and had appointed inspectors from PwC to carry out a skilled person report
The GFSC had been “particularly concerned to ensure that Elite understands and resolves any implications for Elite’s capital adequacy and solvency”.
In 2017 Elite had branches in London, Warrington, Paris, Milan and Madrid, with a staff of around 90 people.
The company sold a range of general insurance products, plus professional indemnity cover and legal expenses insurance.