Monday, 27 January 2020 16:41

Bona Life placed under statutory management

Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Chief Executive Officer, Oaitse Ramasedi has stated that the troubled Bona Life has been placed under Statutory Management in terms of Section 47 of the Insurance Industry Act, 2016, effective January 20.

The act stipulates that an inspector may at any time check whether the institution is complying or has complied with the financial services laws and the conditions of its license. Ramasedi stated that Paul Masie has therefore been appointed the Statutory Manager for Bona Life. “By virtue of his appointment the Statutory Manager is in full control, management and authority of Bona Life forthwith, ” said Ramasedi.

Last week Bona Life Founder and Chief Executive Officer, Regina Vaka-Sikalesele resigned from the position. Bona Life stakeholders are therefore advised to refer all queries, complaints and/or claims pertaining to Bona Life to the Statutory Manager at the offices of Bona Life. Vaka-Sikalesele holds 25 percent equity, while the Botswana Public Officers Pension Fund indirectly holds 40 percent and staff 10 percent.BPOPF members account for 85 percent of Bona Life and are owed up to P700 million.

Bona Life’s misery started in October 2017 when Capital Management Botswana (CMB) and Botswana Public Officers Pension Fund (BPOPF) fought over its shares. The two own 40 percent shares in Bona Life through an investment vehicle named Botswana Opportunity Partnership (BOP). This led to a trail of developments such as relationship breakdown between the CEO and CMB.

In a statement late Wednesday, NBFIRA said Bona Life’s financial position as per the latest records available with NBFIRA based on value of assets at that time, indicate it’s ability to meet its financial obligations to its annuitants and policy holders. The Authority said insurers are required to hold the greater of the Minimum Capital Target (MCT) or Prescribed Capital Target (PCT).Bona Life presently meets the MCT, which is the lowest amount of capital in absolute currency terms that an insurer is required to hold for licensing and ongoing operation. 

“On the other hand, with regard to the PCT the Authority has previously requested Bona Life to seek a capital injection in order to meet the PCT. The PCT is the amount of assets in excess of liabilities that an insurer must hold to cushion against negative business experience that could result in premiums and technical reserves not being sufficient to cover the losses suffered. PCT also serves as a regulatory warning system,” said NBFIRA. 

‘To date Bona Life has not secured the required additional capital to meet the PCT. However, in spite of this, Bona Life’s position as mentioned above appears to enable it to meet its financial obligations to its annuitants and policyholders. This may however not be sustainable in due course should the asset values change and the risk exposure continue to grow without a corresponding capital injection’.

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