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The Decision of the ASF Board in case of Astra Asigurări

The Board of the Financial Supervisory Authority analyzed, during its today meeting, the situation of the insurance company ASTRA, based on the report submitted by KPMG, the special administrator, reflecting the state of play in relation to the recovery plan and the existing options following the failure of the capital increase process.

According to the conclusions of the report,  all three conditions provided by the law for establishing the insolvency state (Art. 5, point 31 of the Law no. 85/2014) are being met:
  • Obvious incapacity to pay the eligible debts with the monetary availabilities 
  • The decrease of the available solvency margin below half of the minimum level provided by the legal requirements in force for the safety fund
  • The impossibility to recover the financial situation of the insurance/reinsurance company within the financial recovery procedure.

On June 30, 2015, the ASTRA` available solvency margin registered a negative value of approximately 871 mil. lei, a liquidity ratio of 0.03 and capital needs of approximately 968 mil lei.
As a result of the analysis and based on the KPMG report` conclusions, ASF Board adopted the following decisions:
  • Closing the financial recovery procedure for Astra
  • Revoking and terminating KPMG mandate as special administrator
  • Withdrawing the functioning license
  • Stating the insolvency state of Astra and requesting the initiation of the winding-up procedure.

The ASF Board concluded that the financial recovery plan did not reach its main objective of avoiding the winding –up procedure. The financial indicators have been under control throughout the implementation of the recovery plan, the company did not register losses at the end of 2014, still in the absence of a capital increase as determined by the financial auditors, the structural problems could not be solved and the critical prudential indicators-solvency, liquidity and capital, could not be reestablished to be in compliance with the legal requirements.

The failure of the last safeguarding stage of Astra capital increase, despite the interest of certain investors with international repute, was basically caused by the absence of the cooperation of the main shareholders.

In line with its statutory mandate, within the next period, ASF is mainly preoccupied to ensure the protection of ASTRA policyholders’ interests, in close cooperation with the Insurance Guarantee Fund and to maintain the stability of the insurance system.

Starting July 27, 2015, the Insurance Guarantee Fund is a public law legal person with the mission to protect the policyholders in cases of winding up of an insurance company. Based on its assessments considering several scenarios, ASF Board concluded that the Fund has the capacity to cover the potential claims up to 450,000 lei per policyholder, according to the legislation in force.

 Read 18 months of efforts for recovering Astra.