City watchdog the Financial Services Authority brought in the SFO to find out how a company that was once a City favourite and worth £1bn in December, is now teetering on the brink.
Provisional liquidators from PricewaterhouseCoopers were yesterday appointed at the insurer, but the circumstances surrounding the fall of the insurer are still unclear.
Representing the firm will be Mark Batten and Dan Schwarzmann, partners in PwC’s insurance restructuring group.
Speculation over the state of the company, which is audited by KPMG, began following work by external actuaries from Watson Wyatt which revealed huge losses arising from claims that had not been entered into the company’s accounting system.
Watson Wyatt had previously provided Independent’s actuarial certificate, and KPMG had signed off its 2000 accounts.
Shares in Independent were suspended at 81 and a half pence last Monday, after it failed to secure £200m to bolster its finances.
PwC was called in to assess its position following a decision to move to run-off – a position where the insurer cannot write new business and relies on its assets to pay claims.
But directors at Independent said they were uncertain whether the company’s insurance operations could be run off on a solvent basis.
Founded 15 years ago by Michael Bright, who quit as chief executive last week, Independent was the darling of the insurance industry.
But from the high of a float in 1993, Independent now finds itself on the brink . Finance director Dennis Lomas, who has been FD since 1996, has remained in place.
PwC said there would ‘inevitably’ be some job losses at the group, which employs 2,000 people across the UK.
It is also believed PwC experts could be looking for evidence of a deliberate attempt to understate claims.
‘We will be conducting a forensic investigation into the financial position of the company as a matter of urgency, including the reasons for the company’s failure,’ PwC’s Batten said.
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