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The RBNZ has failed according to its own report card. What confidence can the public have in the regulator’s decision-making which led to CBL’s liquidation?

CBL was failed by this country’s insurance regulator, the RBNZ, and without redress.

The Bank’s mismanagement of its regulatory supervision of a publicly-listed commercial entity that underwrote risk from 15 countries had a catastrophic international impact. Contracts broken, customers left in the lurch, 540 CBL Group employees out of work, New Zealand policyholders ignored, overseas business partners burned off and more than $750m drained from the pockets of shareholders. On top of that, tens of millions of dollars have been squandered on reports, consultants and lawyers. These include McGrathNicol, as interim liquidator – instead of preserving company assets it took early action that resulted in the burning off of more than $150m worth of profitable CBL business units, and CBL Insurance business lines.

The sad irony is that the main pillar of the RBNZ’s dispute with CBL – its belief that reserves held for the French construction insurance business of CBLI were too low – has since been proven wrong. CBLI and its Appointed Actuary PwC NZ were right about the reserves, and the RBNZ and its consultants’ estimates were ultimately shown to be incorrect when the reserve liabilities were sold on the market.

In a bid to paper over the cracks of regulatory mismanagement that led to the unnecessary liquidation of CBL the RBNZ commissioned a report in November 2018 which it said would be “a thorough independent review of the CBL case to identify what these lessons are, and implications for the insurance regulatory regime”. But only RBNZ inputs (staff interviews, documents, court files) were considered for the report – a constraint that made it hard for the reviewers to provide anything other than a view from the inside looking out. The value of the report must be measured in that light.

Having been involved in building CBL over 25 years, we feel duty-bound to provide the many people who put their trust in the company and its board with a fair and proper explanation of what happened, backed up by correspondence and documents not yet made public. Prior to the liquidation the CBL story was one of strong, profitable and sustainable growth – from NZ$2m revenue per year in 2000, with one employee in one office in Auckland, to an international group with a strong investment grade rating, 540 employees on four continents, over $400m per year in profitable revenue, significant foreign exchange earnings for New Zealand with more than 98% of the business derived from overseas, and tens of millions of dollars paid in tax in New Zealand each year on its worldwide income. CBL Corporation listed on NZX and ASX in 2015 and eventually ranked in the NZX 50.

Given the RBNZ’s role in the liquidation it cannot be the only voice on this matter. Others must also be heard in order to provide a fair and proper picture – CBL directors and staff, PWC (CBL’s independent Appointed Actuary), Deloitte as auditors, clients, banks and other key stakeholders. NZ cannot afford to have this matter swept under the carpet.

There are many aspects to this affair. Over the coming months our aim will be to provide both a summarised version of this saga, and also to cater for those who wish to see more detail. The launch of this website is a first step in that process.

We are not arrogant enough to say that this is an “independent review,” but it will be well-informed and soundly-based, and will present another side to the RBNZ’s “independent review.”

Key points – a brief summary

  • CBL Insurance was placed in interim liquidation on 23 February 2018 following the Reserve Bank of New Zealand’s application to the High Court
  • The RBNZ believed one part of CBLI – its French construction insurance business – was significantly under-reserved
  • This belief has since been disproven by the sale of those relevant liabilities at a value based on the value of the reserves held for them in the CBL accounts
  • The interim liquidation, later to become a full liquidation in November 2018, has had far-reaching consequences for CBLI policyholders, CBL shareholders and other stakeholders
  • All of this was avoidable, as the dispute between CBL and the RBNZ about reserving for the French business could have been resolved – among other options, CBL had $500m of cash in the bank and was ready to raise additional capital if required, and had announced it would sell the rest of its French business assets on an orderly basis
  • The RBNZ was not willing to let CBL move forward on that basis
  • Since the interim liquidation it has stymied attempts by Peter Harris and Alistair Hutchison to back recovery plans that could have restored value to policyholders, shareholders and others
  • Peter and Alistair remain interested in trying to obtain some sort of value for shareholders
  • If you share this interest and/or would like to be kept informed on this matter, please register at