The High Court in Blantyre has blocked the Reserve Bank of Malawi (RBM) from taking over management of a local insurance company, Prime Insurance Limited.
At a news conference on Friday in Lilongwe, RBM announced it was putting the insurance company under its administration to recapitalise it or risk being declared insolvent.
Chuka said central bank’s decision follows months of monitoring of the insurance firm’s financial records and negotiations amid reports of failure by the company to honour claims by clients.
But Prime Insurance through lawyer Patrick Mpaka sought court relief which Judge Kenyatta Nyirenda granted an injunction the central bank or its governor Charles Chuka, who is also registrar of financial institutions, from proceeding with the purported statutory management.
Reads an order for leave to move for judicial reviewr: “It is hereby ordered and directed… that an order be and is hereby made staying the decision of the respondent [RBM] comprised in the letter dated 3rd June 2016 being the decision to purportedly place 1st applicant [Prime Insurance] under statutory management on alleged grounds that 1st applicant is or is likely to be in an unsound financial position contrary to Section 68[a][i] of the Financial Services Act.”
Meanwhile, Prime Insurance goes back to business as normal, according to lawyer Mpaka.
Prime Insurance Company was licensed in 1991 to conduct general insurance business but over the years, grew more into the motor vehicle insurance portfolio, particularly minibuses.