Freedom Insurance Group has declared it will not be recommencing sales of its life products and encountered a liquidity shortfall relating to commission claw-backs.
As well, the company has acknowledged it is being investigated by the Australian Securities and Investments Commission (ASIC) in relation to past misconduct and that a remediation program is inevitable.
In an announcement released to the Australian Securities Exchange (ASX) today the company said it had received a strategic review, and that the Board had determined “there is no immediate commercially viable option to recommence sales of its life products”.
The announcement said, however, that Freedom would continue to assess alternative business models that might arise which would enhance shareholder value and deliver enhanced customer outcomes.
“As part of the review, the Board identified that, on a business as usual basis and in the absence of any responsive action, the company may face a liquidity shortfall during calendar year 2019 arising from the timing of payments of commission clawbacks in the absence of receipts of commissions from new business sales”.
“In this regard, the company is considering alternate options to address the potential shortfall,” the ASX announcement said. “In addition, Freedom is implementing initiatives to improve operational efficiency and reduce costs.”
“Notwithstanding this potential liquidity issue, the Board remains satisfied the company is solvent, based on the funding, efficiency and business restructuring options available.”