January 12, 2006 Insurance

Montréal – The Autorité des marchés financiers (AMF) has initiated penal proceedings against Flanders Insurance Management and Administrative Services Ltd., its vice-president, Gordon B. Roberts, and The Sovereign General Insurance Company.

The AMF’s investigation found that Flanders, which is headquartered in Winnipeg, and Gordon B. Roberts acted illegally, since they were not registered with the AMF as a firm and representative in damage insurance. The investigation also found that The Sovereign was implicated in some of the alleged offences, i.e. those committed since June 2005, since it was informed at that time of the existing problem and nevertheless continued to issue policies negotiated by Flanders.

It is alleged that Flanders offered and negotiated inventory insurance polices in Québec, primarily to recreational vehicle dealers, without being registered with the AMF as a damage insurance firm. As for Gordon B. Roberts, he is alleged to have acted illegally as a damage insurance broker by offering Québec customers of his Manitoba firm to negotiate and purchase various insurance products without possessing the required certification from the AMF.

Based on these facts, the AMF filed the following three statements of offence:

• 210 counts against Flanders for offering insurance products, specifically to dealers of recreational vehicles, without being registered with the AMF as a firm and for having negotiated such insurance policies without being registered with the AMF as a firm. The AMF is seeking a total fine of $367,000.
• 210 counts against Gordon B. Roberts for offering insurance products, specifically to dealers of recreational vehicles, without being registered with the AMF as a representative and for having negotiated such insurance policies without being registered with the AMF as a representative. The AMF is seeking a total fine of $183,000.
• 56 counts against The Sovereign for agreeing to issue insurance policies, specifically to dealers of recreational vehicles, when it could not have been unaware of the fact that these policies were illegally negotiated in Québec by Flanders, a firm that was not registered with the AMF. The AMF is seeking a total fine of $560,000.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

— 30 —

Information:

Media only:
Philippe Roy (514) 940-2176
Issuers, dealers, advisers and representatives: (877) 525-0337, choose option 9 for English, then 1 for industry
Consumers and investors: (877) 525-0337, choose option 9 for English, then 8 for consumers