ROMANIA: ASTRA Insurance under special surveillance and administration procedure

18 February 2014 — Daniela GHETU
ROMANIA: ASTRA Insurance under special surveillance and administration procedure
asf_150The Romanian Financial Supervising Authority announced today, in a press conference, its decision to launch the financial recovery procedure for ASTRA Insurance. The company will function under the special management regime. KPMG Advisory has been appointed special administrator, with a mandate to ensure the company's financial recovery.

According FSA, all insurance policies issued by ASTRA Insurance remain valid until their expiry. The company will have to cover from its own financial resources, existing or resulting during the special administration regime, all its financial obligations arising from or related to the insurance policies.

"During the last five years the company was not properly controlled by the former supervising authority and the corrections decided after the last on site inspection finalized in April 2013 were not fulfilled", said Dan Radu RUSANU, the FSA President. He added that in the FSA's opinion, in the current situation the company is not being able to cover its liabilities in the eventuality of a catastrophic event.

In fact, the main reasons of the FSA's decision are related to the company's bad reputation regarding claims payment, confirmed by the authority's findings, the undervaluation of the technical reserves, the doubtful reinsurance program and a series of financial operations within the ASTRA's affiliates group which affected the company's capacity to fulfill its obligations towards insureds.

Beside the obligation to reassess both the existing claims volume and technical reserves amount according the law, during the special administration period the company will be not allowed to make any financial investment - other than in bank deposits or state bonds -, to sell any of its real estate possessions and to borrow and /or to grant loans.

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