Catholic insurer’s $275m loss amid questions over future payouts

The Catholic Church’s insurer suffered a $275m net loss last financial year amid questions over of its assets during the business’s wind-down phase.

Australian Catholic Bishops Conference president Archbishop Timothy Costelloe. Picture: Fiona Basile

Catholic Church Insurance has suffered a nearly $275m loss and its net assets fell to close to $10m last financial year as the business winds down and the faith’s ­bishops mull the implications of its performance.

Historical child sex abuse cases still loom as a long-term threat to the church after recent court decisions have exposed Catholic entities to big payouts.

Statements show CCI lost hundreds of millions in fin­ancial years from 2019 to 2020, with a $866,000 profit in 2021-22.

CCI said any further losses may or may not trigger the need to pay remaining policy holders less than 100c in the dollar, although the expectation under its scheme of arrangement would be that amounts would ultimately be paid in full.

The Australian Catholic Bishops Conference is expected to discuss CCI’s large losses later this year but advisers believe there will not be a “mini-HIH’’, referring to the collapse of the once $8bn insurer after its net assets crashed in value.

CCI chief executive Rob Scenna said his organisation had transitioned into a claims management firm that didn’t market, sell or renew policies.

In response to questions from The Australian, he said while net assets had fallen, about $100m had been set aside as risk margin assets. “A further loss may or may not be enough to force a trigger event,’’ he said, adding there were reserves well beyond the $10.9m in net assets.

“What this ($10.9m figure) doesn’t account for is further ‘risk margin’ assets which CCI holds, well in excess of a further $100m, that would need to be eaten into by a loss or reserve strengthening before (a) trigger event is struck.

“Before any trigger event being actioned, CCI will continue to pay policyholders with open claims 100c in the dollar as has been historically the case and continues to be now.

“If the trigger event happens (by an anticipation of a loss or reserve strengthening that eats into net assets inclusive of risk margin) then the company starts to pay an initial cents in the dollar amount (less than 100c).

The cents in the dollar amount would be determined by the scheme adviser and approved by the CCI board.

“In this case, the policyholder will have an initial shortfall … which will diminish as the scheme adviser approves more payment to each claimant, albeit in stages.’’

The Australian Prudential Regulation Authority is monitoring developments at CCI.

A spokeswoman said: “APRA has no comment other than to note that CCI entered into a scheme of arrangement in Nov­ember 2023 and APRA continues to monitor CCI to ensure its run-off remains as orderly as possible.”

Last year, ACBC president Archbishop Timothy Costelloe assured the community that the church was fully committed to engaging with survivors of historical abuse to fulfil its legal obligations. “The church is working closely with all Catholic ministries currently affiliated with CCI to ensure continuity of insurance cover for public liability and asset protection,’’ he said.

The Australian revealed in 2021 that dioceses and religious orders across Australia had moved to shore up CCI, which recorded a $192m loss in 2020-21 and lost nearly $250m the previous financial year.