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Troubled car insurer handed to liquidators

The Insurance Authority has filed for the provisional liquidation of motor vehicle insurer Anglo Starlite and disclosed it had a HK$189 million hole in its books.

The action would minimise disruption to its policyholders, Commissioner of Insurance Clement Cheung Wan-ching said.

The company, which was founded in 1975 and has its headquarters in Causeway Bay, insures around half of the city's taxi owners and has a 4.9 per cent share of the vehicle insurance market. Half of its 16,000 policyholders are taxi operators.

Mr Cheung said: 'We petitioned the High Court [on Thursday] evening for Anglo Starlite to enter into provisional liquidation. There is obvious evidence that misstatements are present in the management accounts, meaning the financial position and ability to settle debt of Anglo Starlite will be significantly impacted, rendering the company insolvent.'

The court appointed Peter Whalley and Jan Blaauw of PricewaterhouseCoopers provisional liquidators. The authority appointed the pair to take over the running of the company on Tuesday after discovering suspected forgery and false accounting. It believed Anglo Starlite would not be able to settle debts when they were due.

Hours later, police arrested three of the company's directors, including founder and managing director Atu Balani, and an accountant. They have been released on police bail.

The administrators found misstatements including a bank deposit of HK$189 million that could not be substantiated.

Mr Cheung said policies issued by the company remained valid, though they would not be renewed upon expiry. He was confident that two industry insolvency funds would meet all third-party claims. The authority estimates the company has HK$274 million in claims outstanding. Anglo Starlite cannot write new policies while in provisional liquidation.

Mr Cheung said many policyholders had to be insured in order to stay in business.

'We must keep the company running in order for these insurance policies to remain valid so that commercial vehicles are not affected,' he said. 'A transition to insolvent administration is [therefore] appropriate.'

The authority will discuss with the provisional liquidators whether policies can be transferred to other insurance companies.

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