Hong Kong court orders wind up of Target Insurance

The insurer was deemed insolvent by the insurance regulator.

Hong Kong’s High Court ordered Target Insurance Company Limited (Target) to be wound up under the provisions of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and that Derek Lai and Forrest Kam of Deloitte Touche Tohmatsu be appointed as the Joint and Several Liquidators of Target.

The winding-up petition was presented on 15 July 20221 by Target under the direction of Lai and Kam, who were appointed by the Insurance Authority (IA) as the Joint and Several Managers to take full control of the affairs, business and property of Target from 7 January 2022. 

Upon the appointment of Lai and Kam as the Liquidators of Target, their appointment as the Managers has then ceased on the same date. 

“The IA welcomes the appointment of Lai and Kam as the Liquidators of Target, which will enable a seamless transition on the operation of Target with the view to protecting policy holders and minimising any impact to the insurance market resulting from the winding-up of Target,” the IA said in a press release.

All the in-force policies issued by Target are unaffected by the winding-up order and policy holders may continue to submit their claims to Target in the usual manner. The Motor Insurers’ Bureau of Hong Kong (MIB) and the Employees Compensation Insurer Insolvency Bureau (ECIIB) will continue to process claims arising from third party motor policies and employees’ compensation policies respectively (estimated to be approximately 94% of the insurance liabilities borne by Target) under the respective insolvency fund schemes.

 As for valid claims under the remaining policies (estimated to be approximately 6% of the insurance liabilities borne by Target), the Liquidators will handle them as permitted under the relevant laws. According to the Liquidators’ assessment, the statutory deposit of HK$250 million placed in trust with the IA for Target, together with the estimated realisable assets of Target, should be adequate to settle these claims.

Early this year, the IA seized control of Target Insurance and appointed managers to take full control of its affairs and property as the insurer may have breached statutory requirements under the Insurance Ordinance (Cap. 41) as well as serious deficiencies in its corporate governance.