WILLEMSTAD - Almost twelve years before insurance group Ennia was actually ‘intervened’ by means of the emergency regulation in July 2018, the Central Bank – then still the Bank of the Netherlands Antilles (BNA) – had already identified shortcomings, including a solvency deficit.
Since that time, the American Hushang Ansary owned Ennia and little or nothing was done with the observations, later the warnings, and even the appointment of 'silent curators' made little impression, because the Ennia top didn't care much about it.
Just one year after the takeover of Ennia by Ansary from Delta Lloyd Antilles in May 2005, a letter dated 22 August 2006 to Banco di Caribe (then Ennia's parent company) informed that things were not in order. This letter mentions the investments in Stewart & Stevenson (S&S) and SunResorts (Mullet Bay in Sint Maarten). Those would remain problem files until the emergency regulation of 2018 and they are to this day.
Not that Ansary and his colleagues cared about it (then), because by decision of the supervisory board (SB) of Ennia Holding of 19 February 2007, all investment decisions taken up to that point were approved. Also on 19 February 2007, the same decision was taken by the Supervisory Board of Banco di Caribe. This includes investments in – there they are again – S&S and Mullet Bay.
On July 24, 2008, the Central Bank published an investigation report regarding Ennia Leven for the period December 2006 to May 2008. It states that the investments made by Ennia Holding and Ennia Investments 'cannot be included in the assessment of the solvency of Ennia Leven'. The structure was subsequently changed at the request of the Central Bank, in the sense that Ennia Holding became the parent company with the insurers (Non-life, Health and Life) and Banco di Caribe as subsidiaries. Ennia Investments is also included in the corporate structure as a subsidiary of Ennia Holding.
In the period that followed, from 2010, both internal (legal counsel and internal actuary) and external supervisors made (critical) comments about the way in which and by whom decisions are made within Ennia, about the so-called intercompany claims and underlying investments (S&S and Mullet Bay) and on solvency.
In April 2012, the Central Bank published a investigation report on Ennia Leven for the period 2010-2012. In this report, the CBCS concludes that Ennia Leven's investments are in conflict with its (own) investment policy and the principles of prudent investment. In addition, the report states that there is an unacceptably high concentration risk. With regard to Ennia's investment in S&S bonds, which represent 58 percent of Ennia's total investments, the Central Bank states that S&S has a CCC rating from Standard & Poor's (S&P).
With regard to the role of Ansary at Ennia, the Central Bank states that it is disapproving of the fact that Ansary is both the majority shareholder of Ennia Leven and chairman of the Supervisory Board and the investment committee of Ennia Investments.
A letter from the Central Bank to Ennia Leven dated 10 March 2014 states, among other things, that 'no additional loans' may be provided by Ennia Leven to Ennia Holding or Ennia Investments and that 'the existing loans may not be extended on their due dates'. It has also been re-established that the assets on the balance sheet of Ennia Investments largely consist of investments in S&S and SunResorts and that there too the 'concentration risk' is present. In that context, it is requested to submit the annual accounts of the companies concerned.
In a letter of 25 June 2015 from the Central Bank to the insurers, it was established that the instructions had not been complied with and these were repeated.
In September 2015, the Central Bank amended the solvency requirements. The amended rules are included in the 'General insurance annual statement composition and valuation guidelines non-life insurance aras v 2.7.' (General Valuation Guidelines). In view of the amended guidelines, intercompany claims could in principle no longer be included in the calculation of the solvency ratio.
The letter of 6 October 2015 from the Central Bank to the insurers Non-life, Zorge and Life states that there is a solvency deficit because there is still an increase in the number of unauthorized investments and claims on affiliated entities, which are Central Bank as unauthorized assets.
In a letter dated 4 August 2016, the Central Bank wrote to the insurers that ten points/instructions must be complied with. In a letter from the Central Bank of 22 September 2016 addressed to the insurers, the CBCS repeats the above points and indicates the status.
In a letter from the Central Bank dated 29 September 2016, the CBCS notified Ennia Leven that with effect from 1 October 2016, the Central Bank will appoint two persons as 'silent trustees'.
On November 16, 2016, a meeting took place between the Central Bank and Ennia Leven.
Then things started to go fast: on June 22, 2018, an agreement was drawn up, signed by Richard Gibson and Abdallah Andraous on behalf of Ennia Investments and Ansary on behalf of S&S. It states, among other things, that 100 million dollars (of the total 250 million dollars) will be transferred to S&S and the amount of 100 million dollars will be transferred from Ennia Investments that same day.
This works like a red rag for the new board of directors (RvB) of the CBCS, because on 3 July 2018 the Central Bank withdrew the licenses of the insurers. The insurers' request to suspend the withdrawal decision was rejected by this court.
By order of the court of 4 July 2018, the emergency regulation was pronounced regarding Ennia at the request of the Central Bank. The next day, on July 5, 2018, after the emergency regulation was pronounced, the amount of 100 million dollars was (back) booked to Ennia Leven. Half of this amount was transferred from S&S, the other half – strikingly enough – from an Ansary's private account.