Financial services group 3Sixty Global Solutions Group (3Sixty GSG) has laid into the Prudential Authority (PA), the regulator of financial services firms, for its “desperate” attempt to have the provisional curator of underwriter 3Sixty Life, which it chose itself, removed.
3Sixty GSG welcomed the high court in Johannesburg’s dismissal of the application by the PA to have BDO SA’s suspended head of actuarial services, Yashoda Ram, removed.
3Sixty was placed under interim curatorship by the financial regulator, which falls under the auspices of the Reserve Bank, in December for failing to maintain minimum capital and solvency requirements. The decision is being challenged by the board of 3Sixty Life, including acting CEO Khandani Msibi.
The PA brought an urgent application to have Ram removed as interim curator of 3Sixty Life. The court rejected this, saying the regulator had adopted an “incompetent procedure” to seek her replacement.
In a scathing statement, 3Sixty lambasted the PA’s actions as “desperate”, and said it would emerge from unwarranted attacks led by the PA “much stronger”.
“Through this application, the Prudential Authority exposed itself that it did not do its homework before placing 3Sixty Life under curatorship.
“This is embarrassing from an institution that is supposed to preside over all financial services,” the company said.
‘Disappointed’
Ram was appointed provisional curator of 3Sixty Life in December 2021 after the PA succeeded in having the underwriter, which is ultimately owned by the investment arm of the National Union of Metalworkers of SA (Numsa), placed under interim curatorship.
In February, the PA applied to have Ram replaced on the grounds that her qualifications were misrepresented as she did not hold a degree in actuarial science and nor had she completed the Chartered Enterprise Risk Actuary (Cera) course.
The regulator said it was “disappointed” with the verdict as it considers the matter to be urgent. On Friday, the PA told Business Day that it was considering legal advice, “but for now a decision was taken to focus on the curatorship itself in order to ensure that the interest of the policyholders is protected”.
BDO SA said it respected the court’s ruling and would continue to work with all parties concerned to provide the necessary support for the curatorship process in the best interests of 3Sixty Life policyholders.
During court proceedings, news agency GroundUp reported last week that a report by Deloitte, ordered by the PA in May 2020, had been unearthed outlining double-dealing by the management of 3Sixty Life. These management actions during 2017, 2018 and 2019 came before a huge spike in Covid-related claims left 3Sixty Life struggling to stay afloat.
It said millions of rand in insurance premiums paid by Numsa members was siphoned from the insurer to prop up other Numsa-owned companies between 2017 and 2019.
While alleging the insurer was used as a source of loans for companies in the 3Sixty Group, and carried many of the expenses of these companies, the report also highlights numerous payments made by 3Sixty Life for things that had no commercial value to the company, including a birthday party for Numsa general secretary Irvin Jim.
Birthday party
In its statement, 3Sixty said the truth was that the PA had the report from Deloitte on the investigation it ordered since August 2020. It never followed up with 3Sixty Life on issues in the report and did not take regulatory action against the company because of the report.
“The bigger truth about the transactions in the Deloitte report is that such transactions, which we stand by as 3Sixty Life [for adding value], are an insignificant portion of 3Sixty Life’s annual premium income and expenses,” it said.
It added that companies in 3Sixty GSG, including 3Sixty Life, are “unashamed” of their “symbiotic” relationship with Numsa. “3Sixty GSG was built over many years to be antifragile and the media onslaught will achieve the opposite effect to that intended by our detractors.”
The viability of the group’s internal recapitalisation plan is expected to be ventilated in court on March 22.
With Garth Theunissen
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