Romania’s Financial Supervisory Authority (FSA) found elements of insolvency at the country’s leading insurance firm Euroins, and decided to withdraw the insurer’s license and filed a bankruptcy request.
The decision comes roughly a year after Romania’s insurance market witnessed the bankruptcy of former leading insurer, City Insurance — an affair that left the buffer formed by local insurers for unexpected accidents almost empty.
Euroins, part of Bulgarian group Eurohold with the European Bank for Reconstruction and Development (EBRD) among its shareholders, called the move "a hostile takeover" and blamed the ASFxq for its failure to tackle the past three bankruptcy cases on the local insurance market, according to a response quoted by Profit.ro.
Eurohold says it will appeal the bankruptcy procedure. It also accused the ASF of "not taking into consideration the position of the Bulgarian supervisory body”, which is "the main supervisory for EIG Re [Eurohold Insurance Group]”.
The report drafted by the ASF on the activity of Euroins indicates mismanagement and possibly fraud, even if the ASF doesn't use this word specifically. The market supervisory body says, however, that revenues were overestimated and expenses underestimated; the reserve was insufficient compared to the calculation of future expenses based on national and European regulations. In fact, Euroins failed to follow its own reserve calculation requirements, it said. The deficit of reserves was calculated by the ASF at RON605mn (€120mn).
The ASF has specifically banned Euroins from transferring assets to parent group EIG Re in Bulgaria.
The Policyholders Guarantee Fund (FGA), which manages the insurance system’s buffer, should be designed as a temporary administrator of Euroins, in order to ensure the preservation of the patrimony, according to the ASF’s press release.
The FGA's mandate ends upon the appointment of the judicial liquidator.
Euroins has failed to meet the solvency ratios for several consecutive quarters since June 2022. The insurer needs RON2.19bn capital in order to meet the required solvency ratio, ASF announced, adding that expecting the shareholders to contribute the requirements under a resolution procedure “is not viable”. The ASF said it has monitored Euroins since 2020 and the fines applied over the period add up to RON16mn. The insurer has challenged the fines in court, but lost all the cases.