Today on, 29th April 2019, Freedom Insurance Group Ltd (ASX: FIG) announced that it has executed an Administration Services Transition and Settlement Deed with Swiss Re Life & Health Australia Limited concerning the transition of its policy administration services. As per the Transition Agreement, the insurer parties being NobleOak Life Limited, AIA Australia Limited and Swiss Re will terminate Freedom’s product development and distribution, and its policy administration agreements.
The company will transition its policy administration services to Genus Life Insurance Services Pty Ltd. Together with an external consultant, Swiss Re has agreed to assume responsibility for designing and managing Freedom’s customer remediation program. The company will no longer receive any future trail commissions and other revenue from NobleOak, AIA Australia or Swiss Re, nor will it be required to make commission clawback payments to Swiss Re; and Swiss Re will pay Freedom a net settlement consideration of $5.0 million upon completion of the transition of policy administration services.
In addition to the above, Freedom reaffirms its intention to exit Spectrum Wealth Management post completion of the transfer of its policy administration services.
The proceeds received from the Transition Agreement will be used to pay creditors, wind down the company’s remaining operations and meet any final outstanding regulatory obligations. The Board intends to give back excess fund to shareholders.
The company’s Chairman, Ms Pauline Vamos, stated that over the past few months, the Board has been very focused on delivering the best possible outcome for all stakeholders, including policyholders, employees and shareholders. Unfortunately, the business has not been able to recover from the cessation of product sales in September 2018, following the release of the ASIC Direct Life Report. However, during this period, the Board has continued to administer the policies efficiently and respond to its customers’ requests in a timely manner. This has been reflected in consistently positive feedback and high ratings for Freedom in online consumer surveys and will assist in ensuring that there is a seamless transition to Genus. The Transition Agreement provides certainty to the policyholders and staff and positions the company to deliver a return to their shareholders.
In another update, the company announced the appointment of new directors, where Doug Halley and James Green have been appointed as Non-Executive Directors of Freedom with immediate effect. Stephen Menzies and Andrew Jensen, Non-Executive Directors of Freedom, have retired from Freedom’s Board. Doug Halley has a successful career spanning 35 years as a Senior Executive in Australian and global businesses with considerable experience in treasury, finance, business development, restructuring and corporate development and as a CEO. James Green is an experienced company director who brings a wealth of relevant experience gained over more than 30 years in commerce and law, both in investment banking and private legal practice.
On the stock information front, the stock of Freedom Insurance last traded at a price of $0.020 with the market capitalisation of ~$4.78 Mn. On 7th February 2019, Freedom Insurance requested ASX for a voluntary suspension be applied to its securities, being ordinary shares, as the company was not able to announce its financial position at the time. Its 52 weeks high price stands at $0.480, with an average volume of 1,124,475.
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