GREECE: ASPIS PRONOIA the black sheep of the Greek insurance market

ASPIS Group of Companies former CEO Pavlos Psomiadis has been sentenced to 8 years of imprisonment after providing ASPIS's creditors with a false EUR 550 million letter of guarantee from a British bank in order to keep the defunct business afloat. Deadline until the 4th of May was given by the NGB (National Bank of Greece) for the companies that are interested to take part or in total of Aspis portfolio which at the moment is being fund by the public auxiliary fund.

ASPIS PRONOIA general insurances S.A. a member of Aspis Group of Companies, is a Greece-based insurance company providing insurance plans for pension and investment programs, medical, family, individual and child coverage, as well as property and casualty insurance for over 1 million citizens in Greece that now stand without being certain for their insurance future after the company's license of activity has been revoked since 2009 due to Aspis's inefficiency to cover its large financial deficit that exceeded EUR 500 million.

Since 2002 there where assumptions that things weren't correct in Aspis Pronoia. Greek audit services have made discoveries over the company's financial assets; Properties in Cyprus in inexistent locations, properties in Romania that were appearing to cost even four times over their real price while officials say that the former CEO Pavlos Psomiadis and his family have misappropriated funds that reach EUR 50 million over the past 10 years. In 2009 the deficit is reaching EUR 250 million therefore the finance minister at the time K. Papathanasiou asks Psomiadis to find money to cover the EUR 250 million holes although no action is taken from the company and 5 days before the elections Aspis license is being revoked leaving over one million people wondering for the future. Protests and demonstrations followed by the clients of Aspis in the following months with people wanting to know what happened with their money and how things will be from now on, because many people are depending on their insurance to pay for health costs most of them being citizens with kidney deficiencies or heart problems.

In the meantime the government is taking action by binding 50% of the assets of Aspis insurance fund in order to prevent a following liquidation of the remaining assets of Aspis Pronoia that were estimated at around EUR 130 million for the benefit of the employees and those that were insured with Aspis. But up until a solution was to be found for the insured of Aspis such as transferring the contracts to other insurance companies, in fact a large amount of the contracts were already transferred to other insurers and relatively fast but due to the fact that most of these insurance policies were concerning health covering costs or pension funds programs that had to be covered soon enough it would mean no profit for the companies and no insurance firm was willing to take them, therefore the Public Auxiliary Fund was appointed to cover the losses of Aspis and continues to cover them also in 2012.

Compensations majority volume paid by the AF were concerning companies of interest from Pavlos Psomiadis and for the first quarter of 2012 AF deposited a total of EUR 17 million with EUR 4.3 million to GENERAL UNION, EUR 2.7 million to COMMERCIAL VALUE, EUR 2.5 million to ASPIS PRONOIA and EUR 0.9 million to GENERAL TRUST. In total ASPIS GROUP for the first half of 2012 include cost to the Guarantee Fund of EUR 7.7 million.

At the same time recoveries of the Auxiliary Fund were at limited levels according with official data values determined at EUR 424.705 from EUR 558.000 in the same period in 2011.

In the meantime the arrest and trial of Pavlos Psomiadis followed receiving a sentence of 8 years for the crime of providing a false guarantee letter of EUR 550 million in order to cover the huge dept of Aspis Group while the National Bank of Greece had declared an auction until the 4th of May to the insurance companies that are interested to take partially or in total the portfolio of Aspis Pronoia and Commercial Value. This event will determine the continuance of 300.000 contracts that both companies left behind driving in uncertainty the corresponding number of the insured.

Expectations for success of this auction though were limited due to the fact that both of the companies' obligations exceed EUR 800 million while their assets do not exceed EUR 200 million.

Companies that were interested had access over the firms' financial data in order to evaluate the situation and to come up with a proposal within 20 days.

Unfortunately no contractor was found therefore according to the law; those insured have to be compensated by the already burdened and under financed Life Guarantee Fund with 70% of their demands.

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