CARPATICA Asig was one of the major players on the local MTPL market, with a 19% market share, and held fourth place in the overall market with premiums of approx. EUR 50 million during the first three months of 2016.
The Board of the Financial Supervisory Authority (ASF) made its decision based on a number of reports that highlighted its state of insolvency, and promote the request to trigger bankruptcy proceedings, under Law 503/2004 (republished) and Law 85/2014.
Based on this decision of the Board, Decision no. 1.498/27.07.2016 was issued, which was sent to the company and will be published in the Official Journal.
The Decision of ASF Board to withdraw the authorization of Carpatica Asig was based on conclusions of the Financial Audit Report for 2015 prepared by Mazars, in conjunction with the Evaluation Report prepared by Deloitte, as well as the Report on fulfilment by the Policyholders Guarantee Fund (FGA) of the mandate of temporary administrator. They all highlight the accentuated deterioration of the company's financial indicators, according to statements recorded on 31 December 2015 and, respectively, 30 June 2016, as follows:
- on 31 December 2015, Carpatica Asig had equity of minus RON 611.4 million, with appropriate capital requirements of RON 690.4 million (according to requirements of the Solvency I regime), a liquidity ratio of 0.31 and a solvency margin of minus RON 612.9 million;
- on 30 June 2016, the financial situation of the company remained in negative territory, Carpatica Asig recording equity of minus RON 613.7 million, a liquidity ratio of 0.46 and a solvency margin of minus RON 615 million.
Under these circumstances, analysing the evaluation report prepared by Deloitte, data on company's situation and evaluations performed within the Resolution Plan prepared by ASF, the Board found that none of the three resolution tools provided by Law No. 246/2015 is applicable in the case of Carpatica Asig, in view of the objective of minimizing the impact on protection funds, the only solution viable being to trigger insolvency proceedings.
According to ASF decision, the company is required, within 30 days from publication of the document in the Official Journal, to hand over to the Policyholders Guarantee Fund the complete records of claim files for publication of the list of potential insurance creditors, according to art. 23, paragraph 1 of Law No. 503/2004, republished. At the same time, the FGA mandate of temporary administrator of Carpatica Asig will be extended, in order to fulfil this obligation by the company.
The number of claim files opened by 31 May 2016 amounts to 26.520.
Also, the insurer must take all the necessary steps to notify the policyholders on both their possibility to terminate the insurance contracts with Carpatica Asig and their right to recover the related insurance premiums, proportionally with the period between the moment of termination and the expiry of their validity.
The main concern of ASF is to protect the interests of Carpatica Asig's customers, in tight cooperation with the Policyholders Guarantee Fund, and maintain the stability of the insurance system. According to the legislation in force, protection of insurance creditors from the consequences of insolvency of an insurer lies with FGA, limited to RON 450,000 per policyholder. Based on calculations of ASF experts, FGA will incur, after the delivery of Carpatica Asig bankruptcy, a net impact of up to RON 624 million.
Insurance policies issued by Carpatica Asig shall remain in force until their expiry date. The company had on 30 June 2016 a portfolio of 1,310,852 insurance contracts, of which 936,089 MTPL policies.
According to all ASF evaluations, the insurance market can absorb the implications of Carpatica Asig's exit from the industry without affecting the stability and functionality of the system, with solid premises that 2016 will mark the recovery of this sector on profits, based on a visible improvement of the key claim rate indicators, respectively the increase in the number of insurance contracts concluded.
ASF's decision comes almost one year after it took a similar step with ASTRA Asigurari, the former leader of the Romanian market, now in liquidation.
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