The Romanian Financial Supervisory Authority (ASF) announced on Friday (17 March) the insolvency of the country’s largest car insurer, Euroins, a Bulgarian-owned company part of the Eurohold holding, a move that the latter decried as a “hostile takeover”.
In its announcement, the ASF said had decided “to withdraw the operating authorisation of Euroins Romania, noting the signs of the company’s state of insolvency”.
The ASF Council made the decision based on a solvency analysis which reportedly shows a solvency capital requirement deficit of over €400 million and a capital requirement minimum deficit of over €250 million.
Libertatea reported, “the hundreds of millions of euros that are missing will be paid by the state – in fact, by the insured”.
The company caused a spat with politicians the previous week over the news of price increases for mandatory third-party liability, the most popular kind of car insurance. This led to fears over its financial health, and the company denied facing any difficulties.
Libertatea quotes a government source saying that ASF had found that almost all the assets in Romania of Euroins had been moved to Bulgaria.
On Friday, Eurohold published a communiqué calling the ASF’s move “irresponsible” and a“hostile takeover” by an “organised group”, adding they would challenge the insolvency procedures as they breach EU law.
The Bulgarian holding added that ASF did not wait for conclusions of ongoing audits by the European regulatory authority EIOPA and of EBRD, a stakeholder in Eurohold.
Previously, Eurohold had complained of attacks and even mafia-type pressure on behalf of some actors on the Romanian scene.
Euroins also claims that capping RCA premiums would mean Romania infringes EU law and would lead to “huge increases” in car insurance prices. They also say the situation could threaten both countries expected accession to the Schengen Area and Bulgaria’s accession to the eurozone.
Asked by EURACTIV to comment, the Bulgarian financial control commission KFN said the decision of the Romanian supervisory authority did not affect the Bulgarian insurance companies part of the Euroins Insurance Group AD and that as a result of the supervision carried out by the KFN, no problems with their solvency was found.
Asked to comment, the European Commission said they didn’t have specific comments, as this was a matter for supervisory authorities
“More broadly, we are monitoring developments in the EU insurance market closely”, spokesperson said.
EIOPA did not reply to the request for a comment. EBRD said they will send a comment in writing.
[Edited by Alice Taylor]