Pacific International Insurance has been issued “formal directions” by the Reserve Bank of New Zealand (RBNZ) after it repeatedly failed to comply with its reporting and disclosure obligations.

The New Zealand regulator says the insurer, which also operates in Australia, did not include in its financial statements the solvency ratio for its New Zealand business for three consecutive years, despite warnings in 2018.

By issuing formal directions to the insurer, RBNZ says it can now require the business to carry on in a “specific way and/or take certain actions to address regulatory failures”.

“Pacific International Insurance has a poor history of non-compliance with its regulatory requirements relating to reporting, disclosure and notification,” Deputy Governor and GM of Financial Stability Geoff Bascand said.

“The directions are an escalated regulatory response applying the available regulatory tools to ongoing compliance failures.”

In January the RBNZ ordered Pacific International to commission an independent report on its regulatory processes, resources and oversight controls.

“Based on the findings of this independent report, the directions require Pacific International to strengthen, monitor and continuously improve its compliance systems, controls and processes, and to obtain independent verification of this improvement in a year’s time,” Mr Bascand said.

The Australian Prudential Regulation Authority and the Australian Securities and Investments Commission declined to comment on Pacific International Insurance’s compliance in Australia.

A spokeswoman for the insurer says the business continues to invest in strengthening and monitoring its compliance systems, controls and processes.

South Africa’s Badger International, which acquired the business in May 2018, acknowledges “historical issues” in the regulatory compliance regime that resulted in the directive from the New Zealand regulator, the spokeswoman told insuranceNEWS.com.au.

She says the independent report by Taylor Fry has made several recommendations to further fine-tune the insurer’s controls and processes and minimise the risk of future regulatory lapses, which the business is implementing.

“[We are] taking the review by the Reserve Bank very seriously, with work well advanced in remediating shortcomings,” she said.

“The directive issued by the Reserve Bank provides further guidance for the path ahead and the company will obtain independent verification of the robustness of its compliance regime in approximately one year’s time, as required by the Reserve Bank.”