Panama's insurance regulator, Superintendencia de Seguros y Reaseguros de Panama, has taken control of the assets and management of Istmo Cia. de Reaseguros Inc. after the company failed to meet minimum capital requirements, the regulator said in a statement Dec. 12.
The aim of the move, which is based on Article 47 of Law 63, is to protect the interests of Istmo Re's clients, the regulator said. The intervention is for a period of 180 days, which could be extended if necessary.
The regulator said it made the decision after analyzing the financial results of the company, information obtained during inspections, complaints from clients, legal action against the reinsurer's assets, and publications by rating agencies.
"Despite this difficult situation, we are committed to cooperating as much as possible with the regulator, in order to achieve positive results for the good of all interested parties," Istmo Re said in a letter to shareholders.
The new board in charge of the reinsurer has appointed three executives -- Vivian Dutari, Sergio Hinestroza and Guido Javier Ballivian Benavides -- to oversee the management of the company.
In a Dec. 12 letter to the regulator, Istmo Re president and CEO, Ramón Fernández, blamed the firm's liquidity problems on "unfavorable conditions" in the country, partly due to the Panama Papers revelations, which have reduced foreign investment and exacerbated the flight of capital, thereby "reducing the appetite in our market," Fernández said.
In addition, Istmo Re has been affected by banking regulator SBP's reorganization of Balboa Bank & Trust, which has been accused by U.S. authorities of involvement in a Panama-based money laundering network.
Although Fernández said the case against Balboa Bank & Trust is "unjustified," it has made Istmo Re's clients uneasy and the company has not been able to liquidate its investment in the bank since the regulator took control in May, the executive added.