The owners of Euroins Romania will appeal the revocation of the license in court

The Romanian Financial Supervision Authority Autorității de Supraveghere Financiară (ASF) revoked the license of the Euroins insurance company in Romania – Euroins Romania Asigurare-Reasigurare SA According to the official announcement of the supervisor, the reason for this decision is a shortfall in the Solvency Capital Requirement (SCR) of 2.19 billion lei (about 445 million euros) and in the International Capital Requirement (MSR) of 1.75 billion lei (nearly EUR 336 million).

In the announcement of the Romanian supervision writes the following:

“As of 30/06/2022, the company does not have eligible funds for SCR coverage, a situation that is maintained as of 30/09/2022. Funds in the amount of 2.19 billion lei are needed to restore the Solvency Capital Requirement (SCR) ( around EUR 445 million), and to cover MCR funds in the amount of 1.75 billion lei (nearly EUR 336 million). The decision to withdraw the authorization was taken under the conditions that the situation of Euroins Romania does not make the application of a procedure for restructuring reliably”.

“The decision of the ASF Council is based on an extensive analysis of the situation with “Euroins Romania”. In this sense, we note the fact that since 2020 “Euroins” has been the subject of intensive control actions, which led to the illumination of the real state of the company. Between February 2020 and January 2023, the Authority imposed 26 sanctions on Euroins, resulting in total fines of over 16 million lei, as a result of 17 control actions. All the sanctions imposed by the ASF on the company Euroins Romania were confirmed in substance or finally by the courts before which the company appealed to challenge the measures”.

As Euroins Romania is only one, albeit not small, part of the insurance group – “Euroins Insurance Group” of the Bulgarian Eurohold, the Bulgarian Financial Supervision Commission promptly issued with an opinion on the case.

It says: “The Financial Supervisory Commission (FSC) has received a notification of a decision adopted on 17.03.2023 by the national supervisory authority of the Republic of Romania (Autoritatea de Supraveghere Financiara) to revoke the license of the Romanian insurer Euroins Romania Asigurare- Reasigurare SAto open bankruptcy proceedings against this company, as well as for the prohibition of free disposal of the company’s assets.

Euroins Romania Asigurare-Reasigurare SA is a subsidiary, part of the Euroins Insurance Group AD group, in respect of which the FSC is a group supervisory authority.

In connection with this, the FSC informs that Euroins Romania Asigurare-Reasigurare SA does not carry out insurance activities in the Republic of Bulgaria. The decision of the Romanian supervisory authority does not affect the insured persons in the Bulgarian insurance companies of the Euroins Insurance Group AD group. As a result of the supervision carried out by the FSC no solvency problems have been identified either of the individual companies of the Euroins Insurance Group AD group, nor of the group as a whole.

The Financial Supervision Commission will notify the Bulgarian public upon receiving an additional information on this case in Romania”.

In connection with the revocation of the license of the Bulgarian insurer in Romania, there was an immediate and sharp reaction from the chairman of the supervisory board of “Eurohold” and chairman of the board of directors of “Euroins Insurance Group” Asen Hristov. In front of the media, he stated that the revocation of the license act of continued pressure against the Euroins company in Romania inspired by ASF Vice President Christian Rochu and persons close to him.

“Euroins Romania” is one of the largest insurers in the country. It has been operating on the Romanian market for 15 years. The hard times on the local market came when the Romanian insurer “Citi” appeared on it three years ago, which dumped prices and went bankrupt a year and a half ago, when it became clear that it worked as a financial pyramid from which more than 450 million euros were taken out to London and to Zurich.

During this period, we have several times increased the capital of our company in Romania, adding about 280 million euros to it. This includes the money of the European Bank for Reconstruction and Development, which became our shareholder two years ago and last year took steps to increase its capital in our company in Romania.

Until the end of last year, there were no problems, but at the beginning of this year, the regulator called that there were some problems with the reinsurance contracts of Euroins in Romania, which were concluded with companies such as Hanover Re, Munich Re, Allianz, etc. On February 2, the ASF provided us with a report challenging Euroins Romania’s reinsurance contracts and more specifically whether they would be valid in the event of the company’s bankruptcy. Note that as of June 30, 2022, even the supervisor does not challenge these contracts, and as of September 30, there is already a different opinion, and it is based on unaudited reports. We were given seven days to respond. Then I gave an interview on Bulgarian National Television and called for assistance from our country. In this interview, I gave information about events in which our company in Romania was pressured during the last three years by the person Roshu, who is reasonably suspected to be connected to the former owners of “City”.

In order to solve the problem of reinsurance contracts raised by ASF, and because we had suspicions that the aim of Roshu and the group around him was to appoint an administrator of Euroins in Romania, we entered into a reinsurance contract with EIG Re, replacing the old reinsurance contracts with Hannover Re , Munich Re and Allianz.. So we transferred to Bulgaria all the liabilities and most of the assets of Euroins Romania,” said Asen Hristov.

According to him, one of the reasons for the transfer in question is that part of the assets of the Romanian Euroins – about BGN 100 million are invested in equity funds through the Bulgarian Stock Exchange

“My concern was that an administrator of Euroins in Romania, the moment he was appointed to manage it, could present the receivables from these funds to the BMF. With a turnover of less than BGN 10 million per day, the BMF would hardly respond to such pressure and would lead to spread the financial risk far beyond the stock market,” said Asen Hristov.

Another important detail in the reinsurance contract is that upon its termination there is a penalty, which is that all assets in this case remain in EIG Re, and the reinsurer is not obligated after the termination of the contract with Euroins Romania to continue to cover its newly arising obligations in connection with insurance events.

“All this was done to protect ourselves from the attack and to protect our market from its consequences,” explained Hristov. He said that in the last one month they have received exceptional support from the Bulgarian state in the form of the Ministry of Finance and the FSC and the President.

“The Bulgarian state did everything to protect us,” said Asen Hristov.

He stated that he was surprised by ASF’s decision to withdraw the the license of “Euroins Romania” and suspects that all this aims to cause a scandal in the market to cover up the consequences of the bankruptcy of “City”.

“Romania’s guarantee fund is almost empty. According to information, a third of the claims filed in connection with the bankruptcy of “City” have not yet been covered. On several occasions, there has been a legal attempt to pressure the state to give funds to the fund, and I suspect that the revocation of our company’s license will be an occasion to intensify this pressure,” Hristov believes

The Chairman of the Supervisory Board of “Eurohold” stated that currently “Euroins Romania” is fully liquid and has no late payments.

“To date, absolutely all of the company’s liabilities for damages have been paid. In the morning, the company had available 35 million lei, which is about 7 million euros, if necessary for payment per day, about 1.5 million euros. Separately, we had receivables for nearly 80 million lei from brokers,” said Hristov.

Regarding the accusations that there are over 100,000 lawsuits filed against the company for financial claims, the chairman of Eurohold’s supervisory board said: “That’s true. But over 80% of these lawsuits are from eight garages or chains of garages cars. The problem is that according to Romanian law, repair shops are equal to insurers in determining the value of the damage. And instead of the customer coming to the insurer to determine the damage, he goes to the repair shop, and from there we started receiving invoices with service rates of 400 euros per hour. We are contesting these claims in court because we believe they are not real.”

Hristov stated that he will appeal the decision of the ASF to revoke the license of “Euroins Romania” in court, but whatever happens its assets are now in Bulgaria. He believes that it is impossible to return them to Romania. “What’s more, with the decision to withdraw the license, where the Romanian regulator himself stated that he would insist on terminating the reinsurance contract with EIG, he himself deprived himself of the opportunity to claim these assets,” explained Hristov.

As for the Bulgarian business of “Eurohold”, the chairman of its supervisory board explained that the measures taken will not allow the negative effects of revoking the license in Romania to influence the activities of the group in Bulgaria both in the insurance market and in the field of energy.