Alexander Forbes is facing a R1.2 billion liability related to its former UK subsidiary.

Alexander Forbes has warned investors to expect lower profits for the year ended on 31 March because a business that it had sold was coming back to haunt it.
The country’s largest pension funds administrator said its profit from continuing operations is expected to be between R643 million and R719 million, 5% to 15% lower than the profit that the group generated in the year to March 2020.
Alexander Forbes said it has been slapped with a £61.9 million (about R1.2 billion) liability related to its former UK subsidiary, Alexander Forbes Consultants and Actuaries Limited. Although the company sold the subsidiary in 2012, it said the UK financial sector regulator, the Financial Conduct Authority, has fined the whole industry “in respect of certain thematic errors in historical advice”. 
The industry as a whole has been ordered to make redress payments, and because Alexander Forbes sold that business with certain warranties and a limitation of liability, it has to pay that liability.
Although the group said it had insurance cover in place for these types of claims. But the problem now is that its liability has increased materially from the £12.3 million it initially knew of in the year ended in March 2020. There is now a dispute between the group and its insurer who does not want to cover the elevated liability.
Alexander Forbes said management has obtained legal opinion that the dissenting insurer is incorrect, and it will continue to pursue legal action on the matter. However, in the meantime, the group has settled claims due at the end of March itself. And because of this, the company has taken a knock on of R250 million its income statement in the years to March while it fights its insurer.
Alexander Forbes will published its 2021 financial results on 14 June 2021.