Romania’s largest car civil liability (RCA) insurer, Euroins, an entity owned by Eurohold, with a 35% market share, has been sent into bankruptcy procedure by the Financial Supervisory Authority (ASF). Eurohold will appeal the proceedings.
“The Council of the Financial Supervisory Authority (ASF) decided to withdraw the operating authorization of Euroins Romania, noting the signs of the company’s state of insolvency. The Council also decided to promote by the ASF a request for the opening of bankruptcy proceedings and the appointment of the Insurenace Guarantee Fund (FGA) as interim administrator of the company, with the task of ensuring the administration and management of the insurer’s activity and the adoption of the necessary measures for the preservation of the patrimony. The duties of the company’s management are suspended by law. The mandate of the FGA ends upon the appointment of the judicial liquidator,” the ASF press release states.
“We are currently awaiting notification of next steps. RCA policies will most likely be compensated later by the Insurance Guarantee Fund for the unconsumed period, as happened with City Insurance,” an insurance broker told Energynomics. According to the Union of Insurance Companies UNSAR, policies remain valid for another 90 days from the date of bankruptcy.
The management of Eurohold considers that the decision of the Financial Supervisory Authority regarding Euroins represents “a hostile takeover of the assets of the branch in Romania” and announces that it will start the process of contesting the decision regarding the bankruptcy procedure.
“Regarding the decision of the Romanian financial supervisory authority ASF to confiscate Euroins Romania (part of the Euroins Insurance group owned by Eurohold Bulgaria) by revoking the operating license and opening the bankruptcy procedure and appointing the Insurance Guarantee Fund (FGA) as of the interim administrator of the company, we consider this to be a hostile takeover of the assets of the branch in Romania.(…) In a new proof of irresponsibility, ASF, the institution that failed to stop three bankruptcies in the insurance industry, failed to this time to conclude a reinsurance contract, throwing the RCA insurance market into a real disaster: the Romanians will pay RCA at indecent prices to finance the incompetence of the authorities and the systematic robbery practiced by COTAR,” say the representatives of the Bulgarian company, in a statement quoted by Agerpres.
They also state that the decision confirms “the intention to manipulate the insurance market and the premeditated nature of the supervisory institution’s actions”, after approving in the last two months the participation of a prestigious bank such as EBRD as a shareholder of Euroins and, at the same time, approved the capital subscription, which demonstrates the solvency and stability of the financial position of Euroins, actions not found in the synthesis that is the basis of the ASF decision, which came before the Report requested by the EBRD and before the results of the EIOPA (European Occupational Insurance and Pensions Authority) analysis.
“The management of Eurohold will start the process of contesting the decision regarding the bankruptcy procedure. The management of Eurohold and EIG Re consider this measure abusive, absolutely irresponsible, especially in the current situation of the insurance market in Romania, and in contradiction with good European practices. The Council’s decision of Administration ASF ignores the reinsurance contract of Euroins Romania with EIG Re, the reinsurance company of the group, and does not take into account the financial situation of the reinsurer itself. In addition, the Board of Administration of ASF adopted a decision that does not take into account the position the Bulgarian Financial Regulatory Authority (FSC), which is the main supervisory body in the case of EIG Re. This directly violates European law and could generate harsh consequences and measures at the international level. In addition, the decision of the Board of Directors of the ASF does not take into account see the ongoing audit of EIOPA and EBRD in Euroins Romania, after the company from Romania has signaled to both institutions the abusive actions of the employees of the ASF insurance department carried out previously,” the press release also states.
The representatives of Eurohold also point out that the “abusive decision of the ASF board” caused the activation of art. 26 of the reinsurance contract signed by Euroins Romania and EIG Re, which stipulates that in case of abusive actions and threats against the company by third parties, including abusive suspension or revocation of its license by the regulatory authority, EIG Re has the right to withdraw from the contract with Euroins Romania and to keep in full the subscribed volume premium of the Romanian company, without any obligation towards the claims and the risk related to the Romanian unit.
“Thus, ASF caused the termination of Euroins Romania’s reinsurance contract with EIG Re. As a result of potential abusive measures, the ASF Council bears full responsibility for all negative consequences, including for the payment of damages,” they add.
