On 27 July 2016, the Board of the Romanian Financial Supervisory Authority (“FSA”) analysed the status of the Romanian insurance undertaking Carpatica Asig SA, considering several audit and assessment reports. The outcome of the FSA analysis was the commencement of the bankruptcy procedures against Carpatica Asig SA.
According to the FSA, on 31 December 2015 the company had: (i) negative own capital of RON 611.4 million, while RON 690.4 as own capital was needed under Solvency I ; (ii) a liquidity ratio of 0.31; and (iii) a negative available solvency margin of approximately RON 612.9 million. Further, the company’s situation did not improve by 30 June 2016, when it registered: (i) negative own capital of RON 616.7 million; (ii) a liquidity ratio of 0.46; and (iii) a negative available solvency margin of approximately RON 615 million. As per Solvency II rules, which have applied in Romania since 1 January 2016, Carpatica Asig SA would have needed a MCR of RON 101.2 million and a SCR of RON 285 million, thus resulting in a total need of RON 900 million to be injected into the company.
Carpatica Asig SA must hand over complete records of its claims to the Insurance Guarantee Fund within 30 days of the FSA decision’s publication in the Official Gazette so that the list of the potential insurance creditors can be published in accordance with applicable provisions.
The company must notify the insureds with regard to their option to: (i) terminate the insurance agreements conclude with Carpatica Asig SA; and (ii) recover the premium for the unexpired insurance period. The insurance agreements remain in force until their expiry, unless terminated at an earlier stage.
Carpatica Asig SA had a portfolio of approximately 1.3 million insurance agreements, of which approximately 936,000 cover motor third party insurance liability.
The Insurance Guarantee Fund guarantees the payment of indemnities and damages derived from voluntary and mandatory insurance policies if an insurance undertaking becomes bankrupt. The limit of payments for insurance claims is RON 450,000 (approximately EUR 101,000) per insurance creditor of the bankrupt insurance company. Payments will only be made for insurance claims that are certain, liquid and due and will made be in the Romanian national currency (RON).