Freedom Insurance Group released its 2018/19 financial report last week, revealing that as of early August it had no employees.
The board, led by Pauline Vamos, is winding down the company and says it is assessing possible options to maximise shareholder returns. Directors expect to be able to give shareholders an update at the annual general meeting.
Freedom, whose main business was selling funeral insurance policies via direct sales,
stopped selling its products in October last year. ASIC had released a report on the direct sale of life insurance a couple of months earlier, which carried significant implications for Freedom’s business.
ASIC reported that the cancellation rate for policies sold direct was very high and that the claims experience was poor. It said people were being sold product they didn’t want, couldn’t afford and which didn’t perform as expected.
The regulator said it would restrict outbound sales of life and funeral insurance to protect consumers and that it expected industry to respond with higher standards.
In December Freedom announced that it would develop a remediation program for affected customers.
It had been working on the acquisition of life insurer St Andrews Australia from Bank of Queensland as a way of diversifying its business, but that transaction was terminated in December.
It continued to administer its insurance book and in April it sold that business for $5 million. The payment reflected the value of net trail commissions after offsetting commission clawbacks, expected administration costs and allowance for a customer remediation program.
The company’s distribution arrangements with other insurers were terminated.
It had planned to sell its Spectrum Wealth Advisers business but in May it was determined that Spectrum was unable to continue to meet all conditions of its Australian Financial Services Licence. Freedom started winding the business down.
Freedom earned revenue of $11.2 million in the year to June – down from $61.3 million the previous year. After expenses of $88.8 million it reported a loss of $63 million.
At June 30, it had cash of $6.9 million and net assets of $4.7 million – down from $67.6 million a year earlier.