Well-known after-the-event insurer LAMP has applied to go into liquidation after failing to secure additional finance so it can meet its current obligations and insure new risks.
The Gibraltar-based company said the failure of negotiations with new backers meant it has “no option” other than to submit an application to the Supreme Court of Gibraltar to be placed into liquidation.
The court will hear the application on 31 May.
In a statement on its website, LAMP said: “The company’s cashflow projections show that it has insufficient liquid assets to enable it to pay its debts as they fall due and there is no reasonable prospect of obtaining sufficient liquid assets in sufficient time to enable it to do so. Consequently, the company is insolvent.
“The company’s insurance policies that have not expired remain in force. However, as the company is insolvent it is unable to make any claim payments.
“Policyholders should immediately consider acquiring alternative insurance protection. Where policyholders have purchased policies from the company through an insurance broker, solicitor or other intermediary, they should consult that person to seek advice as to what options are open to them.”
Once appointed, the company’s liquidator will contact all creditors.
“In the interest of policyholders, the company is still actively considering all options, including a potential sale of the business,” the statement continued.
However, the due diligence, regulatory approval and unconditional financial commitment would have to be made before 31 May.
“The possibility that a sale may arise should not be relied upon by policyholders when considering acquiring alternative insurance products.”
LAMP also insured international private medical policies to expatriates and overseas nationals via wholesale intermediary partners, and special lines of business in niche markets, including motor warranty, computer and marine guarantee.
The Gibraltar Financial Services Commission warned that it was likely that the amount recovered by the official receiver – if appointed – would not be sufficient to meet the amount due to policyholders in outstanding claims and unearned premiums.
The commission said claims should be reported in accordance with the instructions on the policy documents. The liquidator, when appointed, may admit claims as insurance creditors in the liquidation or submit claims for UK policyholders to the Financial Services Compensation Scheme (FSCS).
“If eligible under the rules of the scheme, the FSCS may protect UK policyholders in respect of claims made under policies written by LAMP but unpaid along with claims for return of premium,” it said.