The Australian Prudential Regulation Authority (APRA) has dropped its Federal Court actions against Rural & General Insurance (R&G) and has left it to a deed of arrangement to wind up the company.  

The regulator was concerned the insurer – which is now in run-off – was insolvent and wanted a court-supervised liquidator appointed. R&G had already appointed voluntary administrators, but APRA said that appointment was “not in the best interests of the policyholders”.

APRA applied last September for a Federal Court order to wind up R&G under the Corporations Act, but a creditors’ meeting on March 12 agreed to a deed of company arrangement. The regulator says this has achieved a similar outcome to what it wanted, and that it is “no longer in the public interest to continue with the proceedings”.

Justice Roger Gyles refused to make an order for either of the parties to pay the other’s legal costs.

The regulator justified its actions by stating Justice Gyles’ comments that “it was appropriate for APRA to have commenced these proceedings and that it was virtually bound to do so”.

R&G has had an interesting career in Australia in recent times. Rural & General Insurance Broking, a licensed Sydney-based broker, has also come into the regulatory spotlight over the last couple of years in relation to its dealings with a Vanuatu-based unauthorised foreign insurer, Rural & General International Insurance.

It recently complained to the Press Council and threatened to sue after the Australian Financial Review allegedly implied that R&G Insurance Brokers was involved with R&G Insurance. A lengthy statement said: “This company [R&G Insurance Brokers] is not a related entity as defined under the Corporations Act with either R&G… and/or R&GII.”