In a ruling that may have lasting consequences for financial governance in the insurance sector, the former chief financial officer of collapsed New Zealand insurer CBL has been ordered to pay more than NZ$1.25 million after being held personally liable for breaches of market conduct law.
CBL sold policies in the UK, primarily through its Irish-regulated subsidiary, CBL Insurance Europe DAC (CBLIE). Operating under the European Economic Area (EEA) passporting regime, CBLIE was authorised by the Central Bank of Ireland but permitted to write business across the EEA, including in the UK.
The High Court in Auckland found Carden Mulholland, who served as CFO during the months leading up to CBL’s collapse in 2018, guilty of multiple contraventions of New Zealand’s Financial Markets Conduct Act (FMCA). He was ordered to pay a pecuniary penalty of over NZ$640,000, along with legal costs amounting to NZ$600,000.
The case is the first time a New Zealand court has imposed personal liability on a chief financial officer as an accessory to a company’s breach of continuous disclosure obligations. Industry observers suggest the decision will likely resonate beyond New Zealand, especially in jurisdictions such as the UK, where regulators have increasingly emphasised individual accountability within senior management.
CBL, once a rising star on the NZX and ASX with a market capitalisation of nearly NZ$750 million, collapsed in early 2018 following mounting solvency concerns tied to its European insurance portfolio. Shareholders lost their entire investments, and thousands of policyholders were left in limbo across France, Ireland and the UK.
Justice Ian Gault, in his ruling, said the company had failed to inform the market of material developments in a timely manner. This included its urgent need to raise NZ$100 million in reserves and actions taken by the Central Bank of Ireland to restrict its operations. The result, he concluded, was that investors were “denied timely access to material information and continued to trade, uninformed, for an extended period of more than five months”.
The Financial Markets Authority (FMA) brought the proceedings against Mulholland following earlier settlements with CBL’s former managing director, Peter Harris, and four former non-executive directors. Collectively, they have been ordered to pay over NZ$11 million in penalties.
“This was the first time New Zealand courts had considered the liability of a CFO acting as an accessory to a company’s contravention under the FMCA,” said Margot Gatland, head of enforcement at the FMA. “The court’s ruling and penalty demonstrate that such behaviour is unacceptable and will not be tolerated.”
CBL’s collapse triggered regulatory action across multiple jurisdictions. CBL Insurance Europe DAC, its Irish-regulated subsidiary, was placed into liquidation in 2020, and compensation schemes in the UK and Ireland were activated to protect affected policyholders. In France, where CBL had insured thousands of homebuyers through decennial liability products, its withdrawal left a significant protection gap.
An independent review into the conduct of the Reserve Bank of New Zealand found that concerns about CBL’s reserving practices had been raised as early as 2013, but were not acted on decisively until 2017. At that point, European regulators had already begun restricting the activities of CBL’s reinsurance partners, casting doubt on the group’s capital strength.
Ongoing litigation continues in New Zealand concerning CBL’s initial public offering in 2015. The FMA has launched further actions relating to alleged misleading statements in the company’s IPO documents. Meanwhile, class action proceedings from shareholders and creditor claims against former executives and professional advisers are also moving through the courts.
The ruling against Mulholland will be closely watched in the UK insurance community, particularly in light of ongoing regulatory emphasis on senior management accountability under the Senior Managers and Certification Regime. While the case arose under New Zealand law, the themes echo recent UK developments, including greater scrutiny of financial disclosures and individual responsibility for governance failings.
For CFOs and compliance officers operating within firms that write cross-border business or rely heavily on delegated underwriting authorities, the judgment may prove instructive. In particular, it reinforces the legal risks that can arise when companies fail to act transparently under stress, and the extent to which those in key financial positions may be held accountable.
CBLIE provided a range of non-life insurance products to the UK market, including:
These products were distributed via UK-based managing general agents (MGAs) and insurance brokers. Many of the policies were aimed at individuals and small businesses, especially within the construction and building trades.
When CBLIE ceased paying claims in December 2019 and was subsequently declared insolvent in March 2020, the Financial Services Compensation Scheme (FSCS) in the UK stepped in. The FSCS confirmed that it would protect most UK-based policyholders, specifically individuals and small businesses with an annual turnover of less than £1 million.
Although CBL Insurance was not directly authorised by the UK's Financial Conduct Authority (FCA), its access to the UK market was lawful under EU passporting rules that applied prior to Brexit. This arrangement allowed EU-licensed insurers to offer services across borders without needing separate authorisation in each member state.
