Romania’s largest insurance firm Astra was recently placed under special administration by the country’s Financial Surveillance Authority (ASF) and will be managed by consultancy firm KPMG. ASF decided to suspend the shareholders and the management of Astra, in order to help the firm recover financially, according to the authority’s release.
Starting on Tuesday, ASF suspended the legal attributions pertaining to significant shareholders. The administrator will retain all the responsibilities, including voting rights for naming and revoking ASF board members.
The new administrator will have to start procedures to increase the social capital so as to comply with the national regulations. The suspension is valid throughout the entire recovery period.
Two weeks ago, ASF was suspecting Astra Asigurari of having purposely undervalued the damages it was supposed to pay, so its reserves were 40 percent below the required level, according to Mediafax.
KPMG will initiate as an emergency procedures to increase social capital to a level that will allow the society
– to satisfy liquidity and solvency standards;
– to produce the inventory for claim files in the society’s administration, in regards to working out real damages and real obligation on behalf of the insurer.
Inventories and investigations will be be treated as emergencies. Over the course of this process, ASTRA is prohibited from making investments and from estrangements of goods and assets. KPMG will take the necessary steps to retrieve loans and prevent any further loans from being taken. The administrator will evaluate, according to norms in effect, the society’s receivables for the period in question, while registering the results in the firm’s account balance.
Should a major event happen, ASTRA will not be able to honor its financial obligations, according to Dan Radu Rusanu. Based on the company’s statistics, at the end of September 2013, Astra had over insurance policies on record for fires and earthquakes.
“In the event of a major catastrophe, Astra will not be able to fulfill its financial obligations”, Rusanu was quoted as saying. He added that KPMG has received permission to sell assets and buildings in order to assure Astra’s financial recovery.
“In the last five years, Astra Asigurari wasn’t under any surveillance. An examination was started in 2012 and finalized in April 2013, seeing as the new ASF board started working on Monday, April 29. We came to find that the inspection was finalized. The former CSA board provided a new recovery plan spread out over nine months, until December 31. Mister Daniel Tudor will have a lot to answer for. He is the one who protected Astra”, Rusanu explained.
Daniel Tudor lead the Commission for Insurance Surveillance (CSA) between October 2012 and April 2013. He also served as FSA vice president until October 2013.