Danish insurer Alpha has been declared bankrupt, debunking earlier claims from the carrier and fronting agent for now-defunct Kiwi firm CBL that is was solvent.

A notice on Alpha’s website said that it had filed for bankruptcy after a decree from Denmark’s Maritime and Commercial Court dated 8 May.

The order followed a move by the company’s liquidators which were appointed after the it went into run off at the beginning of March, according to a memo from the country’s regulator.

It said that Denmark’s insurance guarantee fund was likely to be hit with a bill from the bankruptcy.

A statement from the UK regulator the Financial Conduct Authority (FCA) said that private and commercial customers would likely be affected in the country where it insures thousands of private hire vehicles including London’s black cabs.

In a statement on 4 March Alpha reassured its markets that: “The company is solvent, and we therefore expect that all present and future obligations will be honored”.  

It continued: “Claims will be paid and all policies in force will remain so until their contractual expiry. We can confirm that Alpha Insurance continues to operate and all policies in force will be served as has been the case up to today.”

But news of the bankruptcy and the revelation that the country’s guarantee fund will pick up the tab for a portion of that failure puts paid to any suggestion that the firm remains solvent. 

It is the latest development in an ongoing saga that started with the collapse of Alpha’s main reinsurer, New Zealand-based CBL, which was put into interim liquidation by its home regulator in February.

According to CBL’s 2016 annual report, Alpha held a 3.1 percent stake in the company which will almost certainly be worthless following the appointment of liquidators in New Zealand and the suspension of trading in its shares, which are listed on the Australian and NZ stock exchanges.

Alpha – which distributes through a chain of MGAs in Europe – accounted for around 11.4 percent of CBL’s NZ434.8mn ($313.4mn) in gross written premiums.

According to Toby Fiennes, the head of prudential supervision at the NZ financial regulator, Reserve Bank of New Zealand, CBL provided quota share reinsurance to Alpha from 2006 for French construction business, dommages-ouvrage (DO) - or “insurance of the works”.

CBL collapsed after the scale of its liabilities from writing the business line, primarily from the now defunct Gibraltar MGA Elite, became apparent.

For French DO, Alpha would retain 50 percent and cede 50 percent to CBL. Until late 2016, CBL would reinsure 80 percent of Elite’s book of DO.

At the end of February, the Danish regulator ordered Alpha to increase reserves on Norwegian workers compensation business by DKK227mn ($37.5mn) and on French construction business by DKK62mn.

Alpha is one of three large unrated Danish insurers/MGAs - together with Qudos and Gefion - that partners with European MGAs and retail distributors to write niche specialty and commercial SME products.

Alpha’s ownership is spread widely, with many of its business partners owning small, minority stakes. But it is understood that investment fund manager Twelve Capital has a EUR20m ($24.6mn) investment in the firm.