6 July 2020
Club Insurance and Covid-19
It is now more than a decade since I questioned the wisdom of the MCC holding shares in a captive insurance company (Reigndei Ltd) offshore in Guernsey – see 3) below. Now the issue has taken on a different dimension altogether with the cancellation of all Big Matches at Lord’s. Last year’s Match receipts (£23.58 million) and Catering receipts (£19.79 million) amounted to more than two thirds of Club income. Did the Club have a valid Cancellation Contingency Policy in place to cover any losses? NO.
At this year’s AGM the absence of proper insurance to cover lost income from cancelled matchplay on Big Match days at Lord’s was described as “unfortunate”. A better word might be “negligent”. Who is to blame? Under MCC Rule 13.1 – the MCC Committee.
The ECB Financial Statement 2018/2019 P36 20.4 refers to “premiums payable by ECB to Reigndei Limited, an insurance company beneficially owned by the 18 FCC’s,, MCC and the MCCA were £2.145 million in 2019 and claims were made of £1.583 million.”
Reigndei Ltd. is no ordinary insurance company it is a captive insurance comany based in Guernsey. There is no trace of any MCC relationship or Investment in Reigndei Ltd in the latest MCC Report and A/c’s as is the case with Kent County CC (See below) and Sussex CC
Interestingly the Jockey Club had a captive insurance arrangement in place until 7 years ago when the Directors (Members) decided this type of policy was far too risky and unsuitable for a Royal Charter Company. In the event of a catastrophic claim which had not been properly underwritten by a major Lloyds insurer the Jockey Club assets (Racecourses) would have been placed in jeopardy. Therefore, all of the events at their major Racecourses that include Cheltenham, Aintree (Grand National) and Royal Ascot are now fully covered by an All Risks Cancellation Contingency Policy.
An insurance policy covering loss of business will not cover financial losses at Lord’s due to the Covid-19 outbreak and a captive insurance arrangment in this situation with catastrophic losses in prospect threatens the “beneficial owners” that include the MCC. We cannot know the extent of these losses in the absence of knowing what capital reserves are retained by Reigndei Ltd. If they are insuffiecient to meet the claims, the MCC may be liable for a proporion of the losses.
The following is an extract from Kent County CC Report and A/c’s 2018
The club has an investment of 30,000 ordinary £1 shares in Reigndei Limited, an unquoted company registered in Guernsey, established in order to provide insurance cover for rain affected international matches. In common with other First Class Counties who have like investments, these shares are being held by England and Wales Cricket Board as Trustees for the Club. The fair value of this investment is deemed to be £Nil.
The club also owns other assets, for example paintings and other memorabilia, where the value is not recognised in the nancial statements.”
To Secretary MCC
MCC and the ECB
26 October 2009
I am writing to you concerning vexatious matters that continue to affect the independence of MCC and create conflicts of interest within Lords that effectively subvert the best interests of our Club, the Members and our national game.
1) MCC Conflict of Interest – ECB Directorship
As a Chartered Accountant you identified a conflict of interest and resigned as a Director ECB. The MCC Committee has appointed Matthew Fleming in your place who “has a duty to act in what he considers to be the best interests of ECB and cricket in general.” At law this appointment is ultra vires and I quote Lord Justice Morison’s Opinion “ Any MCC Committee member who considers the best interests of cricket must do so qua MCC Member and not qua TCCB Member”. This Opinion, also endorsed by Mr. Justice Connell at the time, holds good today for the ECB. Therefore, any MCC employee or member of the MCC Committee should effectively be disqualified from being an ECB Director.
It is my strongly held belief that the MCC should have appointed a Non-Executive Director to ECB and I formally proposed Peter Leaver QC at this year’s AGM. Acting in this capacity Peter Leaver would have brought his unique legal and sports experience to bear in an urgently needed supervisory role and any conflict of interest removed. A suitably qualified Queen’s Counsel is appropriate and I withdrew from calling an SGM on these grounds.
2) The ECB Constitution
The ECB is constituted as a private company that does not have suitable Articles defining the roles and responsibilities of a UK sports authority receiving substantial public funds.
The MCC, acting as the guardian and trustee of the finest traditions of our national sport and owner of the Laws of Cricket, has no place within any organization that can act negligently and brings the game into disrepute as the ECB has done in the case of the “Stanford Affair”. Neither should the Club belong to any organization accepting significant public funds that does not employ a Financial Director who is a properly registered member of the ICAEW.
3) MCC Shareholding in an Offshore Company
MCC is a shareholder in Reigndei Ltd trading in Guernsey and providing specialist insurance cover for ECB members. The ECB seems to act as an insurance broker on behalf of all the shareholders whose shares are held in trust. I am unable to find any record of this shareholding in the MCC Annual Accounts and despite my questions at AGM’s I have been unable to obtain any satisfactory explanation relating to this shareholding its value and the reason why MCC purchased it in the first place. In particular it needs to be established with certainty that this arrangement through ECB in no way contravenes the tax laws of either Guernsey or the UK. The “premiums” paid by ECB and the “claims” paid to ECB by Reigndei Ltd in recent years do not seem to reflect the existence of arms length arrangements at open market values based upon the fundamental principles governing insurance cover. The ECB FD is a Director of Reigndei Ltd.
4) Derbyork Trustee Company Ltd (Co’s House Reg No 02774287)
This Company holds the partly paid MCC shares in Reigndei Ltd. in trust. DRW Silk is named as the MCC shareholder. Despite reminders from Companies House the Annual Returns due by 14/01/08 and 14/01/09 are now 21 months and 9 months overdue. The ECB FD is the Company Secretary.
Company dissolved 2 January 2018
1a) Why have the Committee replaced Keith Bradshaw as an ECB Director? His reasons for resignation (conflicts of interest) were supported by Lord Justice Morison’s opinion and why was my proposal to appoint an MCC Member to the ECB in a non-executive director capacity ignored?
2a) Why does MCC continue to belong to an inappropriately constituted organisation that has assumed the responsibility for the government of cricket in the UK without ever having consulted the Members of MCC?
2b) The ECB has brought cricket into disrepute (Stanford Affair). Why therefore has the MCC not acknowledged the need to effect urgent constitutional change and introduced plans to ensure that the ECB is properly constituted in the future in accordance with the expressed wishes of the Griffiths Working Party?
2c) Why did the MCC approve the appointment of an ECB Financial Director whose membership of ICAEW had lapsed?
3a) Why is the MCC not directly responsible for insuring lost ticket income through a UK based organisation such as Lloyds of London rather than a broker such as the ECB that is not registered with the FSA?
3b) The average claims received by ECB from Reigndei per year were £280K from 2005-2007 (premiums paid £1.93 million) and in 2008 they amounted to £5.5 million (premium of £1.99 million). How much did MCC receive and why did the claims rise so significantly from the previous 3 years in 2008 (x20)?
3c) Could I be given a detailed explanation concerning the partly paid MCC shareholding in the offshore Company Reigndei Ltd, the dividends received and good reason why the MCC deems it necessary to maintain this shareholding?
4a) What is the reason for not complying with the Companies Act?
There has been a steadfast refusal by several past officers and Committee members of the MCC over the years to answer my legitimate concerns over these serious matters and expressed in writing, at AGM and SGM. It would be appreciated therefore if you would circulate this correspondence to all Committee members and the Club Trustees as soon as possible in order that the questions may be properly addressed and answers provided without further obfuscation.
Very many thanks and best wishes,
Nigel J Knott (Dr.)
Note dated 19 August 2010
I understand this letter was shown to the Club Chairman who decided that the Committee agenda was too busy to find time for discussion. It was never circulated. NJK