The Financial Supervisory Authority (ASF) Board decided to open the recovery procedure based on plan for Societatea de Asigurare – Reasigurare City Insurance SA, a press release informs, after a surveillance diagnosis and an unannounced inspection report which highlighted a number of shortcomings regarding company’s capital and solvency, a press release informs.
Among the most important issues identified in the company’s situation are: the high degree of the poor loss reserves adequacy – 43 percent and liquidity ratio of 0.83 for general insurance, which does not comply with the rules in force.
ASF has limited the sales of insurance policies to three quarters of last year’s subscriptions.
Moreover, the subscription for new insurance contracts will be banned.
According to ASF calculations, City Insurance would need a capital increase of RON 150 millions, which means over EUR 30 million.
The amount requested by ASF for capitalization is not high considering the amounts that were required for Astra – RON 1 billion or Carpatica and Euroins – RON 400 million each.
At the same time, the insurance company had serious delays to pay compensations for Green Card damages, with negative consequences for the entire MTPL insurance market in Romania.