Hong Kong’s Insurance Authority (IA) announced on Friday (26 July) that it had appointed managers from Deloitte to take control of Tahoe Life Insurance Company Limited following coordinated regulatory efforts related to ongoing financial difficulties and suspected irregularities.
The IA said the decision followed a series of supervisory interventions since mid-2020 aimed at protecting policyholders while urging management and shareholders to address issues related to irregular investments.
“Despite Advisors having been appointed to provide Tahoe Life with recommendations and guidance, the company has failed to submit audited financial statements in respect of 2022 and 2023, to deliver on promises to bring in new strategic investors, and to improve on its corporate governance,” a spokesperson from the IA said in a statement.
“Given that its majority shareholders are embroiled in multiple debt proceedings, appointment of the Managers is necessary to ascertain the latest financial and solvency position, preserve capital resources and identify optimal recovery solutions in the best interest of policyholders,” the spokesperson added.
The regulator added that the situation has required coordinated supervision interventions involving the IA, Securities and Futures Commission (SFC), and Bermuda Monetary Authority (BMA).
Joint regulatory coordination
The IA and SFC have been working together since May 2020 to investigate suspected irregularities in Tahoe Life’s investment portfolio. Those inspections revealed assets were channelled into financial instruments linked with a related party on the Mainland, the regulators said.
The SFC had launched its own investigation and took disciplinary action against a licensed fund manager involved in the transactions.
In a coordinated effort, the Bermuda Monetary Authority (BMA) announced it had appointed Joint Provisional Liquidators (JPL) for Tahoe Life in Bermuda.
“Since Tahoe Life is incorporated in Bermuda, the IA has all along been coordinating with the BMA on any regulatory actions against Tahoe Life,” an IA spokesperson explained, adding, “The appointment of the JPLs serves to ring-fence the assets of (rather than to wind up) Tahoe Life for protection of the policy holders’ interests.”
The IA appointed Derek Lai and Forrest Kam from Deloitte Touche Tohmatsu and Oliver Cheng from Deloitte Advisory (Hong Kong) Limited as the Joint and Several Managers to oversee the company’s affairs and assets.
The Managers are tasked with maintaining business operations, including customer service, premium payment, and claims settlement.
The IA assured policyholders that their rights would not be affected and that Tahoe Life could still service existing policies, adding that policyholders should carefully assess their circumstances and avoid making hasty decisions.
Tahoe Life Insurance was formed in 2017 after mainland Chinese investment firm Tahoe Investment Group acquired Hong Kong’s Dah Sing Life Assurance. The insurer has approximately 90,000 life policies valued at HK$18bn (US$2.3bn), representing less than 1% of the market share.
Since 2021, the IA has banned Tahoe Life from issuing new policies, restricted its investments, and prevented it from trading with any company connected to Tahoe Group after a HK$2.2 billion debt investment became worthless in July 2020.
“The IA expresses deep appreciation to the SFC for providing valuable support during an investigation on related party transactions entered into by Tahoe Life,” Clement Cheung, Chief Executive Officer of the IA. “This bears testimony to the efficacy of the MoU in protecting the interest of policyholders and the image of Hong Kong as an international financial centre,” Cheung added.
