An administrative penalty of €475,192 imposed by the financial services watchdog on Setanta Insurance Company Ltd was converted into a notational penalty to the same amount due to its frail financial position.

The Malta Financial Services Authority said Setanta failed to comply with its conditions of authorisation, to maintain the required margin of solvency, to have adequate technical reserves, to submit an effective plan for the restoration of a sound financial position, and to abide by the regulator’s directive to cease writing new business including renewal of policies.

The serious shortcomings merited an administrative penalty of €475,192, the MFSA said noting, however, that, given the company’s frail financial position, an effective pecuniary penalty could cause further detriment and prejudice to the rights of policyholders and other claimants who might still be trying to recover their funds.

It, therefore, decided that while the administrative penalty would still be imposed, it would be limited to a notional penalty to the same amount. The financial services watchdog pointed out that, while the notional penalty reflected the seriousness of the breaches, the actual amount would not be paid to protect and safeguard the rights of policyholders and claimants.