Financial services firm Prosperity Advisers has entered into administration over a professional indemnity (PI) claim its insurers have refused to pay.

The Newcastle-based group, with offices in Melbourne and Sydney, went into administration early last week after underwriting agency Dexta Corporation withdrew its PI cover over what Prosperity describes as a “technicality”.

A group of investors took Prosperity to court over alleged poor financial advice given in 2004 and 2005. Prosperity paid the claims, and in 2009 launched legal action to recover payments from Dexta after it withdrew PI cover.

Prosperity founder Allan McKeown says Prosperity continues to operate, but was forced into administration as Dexta’s policy cancellation placed it into an “invidious” position.

Dexta is owned Axis Capital, which purchased the company in December 2008 from Stardex.