Ardaf Cluj, a company the Insurance Surveillance Commission (CSA) placed under receivership in mid-July, in the first six months of the year reported losses topping 82.4 million RON (23.2 million euros), according to the company's H1 report.
The losses were generated by the reassessment of technical reserves, says Radu Cocea, the receiver CSA designated to run the company during this period.
Ardaf at the end of the first half had gross technical reserves standing at 157.7 million RON (over 44.5 million euros), double the value posted in the first half of last year. Insurance companies set up technical reserves so as to be able to meet future potential obligations to the insured.
Ardaf is now under receivership as its liquidity coefficient had dropped below 1, the limit set by law, with the main move the receiver proposed to turn the company around being a share capital increase by 180.2 million RON (51m euros). According to the receiver, undersized technical reserves and insurance premiums hurt the company's financial situation.
Revenues posted by Ardaf in the first half of the year amounted to 127 million RON (35.9m euros), 60.8% of the value budgeted for this period. The insurer's expenses were almost 65 percent higher than the budgeted figure, coming to 209.5 million RON (59.2 million euros).
Revenues from gross premiums underwritten stood at 122.7 million RON (34.7m euros) at the end of June, with the total number of insurance contracts Ardaf sealed during the first six months of this year exceeding 555,000.
Compared with the first six months of 2005, the company's gross premiums underwritten slipped 21.79 percent in RON. Car civil liability insurance contracts (RCA) account for almost 61 percent of total subscriptions.
The majority stakeholder in Ardaf is businessman Ovidiu Tender, who owns approximately 70 percent in the company's stock through Tender SA company.
Tender is currently under arrest and was arraigned in Rafo case. Other shareholders in the company are Clairmont Holdings, a Cypriot offshore company, holding a stake of around 12 percent, and Raiffeisen Zentralbank Austria, with a 10 percent stake.
The company's shareholders have recently decided to operate two capital increases over the following period, with a total value of 180.2m RON (around 51m euros). The two operations are necessary to keep the company afloat. The capital increases are to be finalised by the end of September.
According to Radu Cocea, should the shareholders fail to subscribe, a third capital increase will be operated.
Ardaf Cluj
Was placed under receivership by the Insurance Surveillance Commission in mid-July
Reported losses of more than 82.4m RON (23.2m euros) in the first half of the year, following reassessment of the technical reserves
At the end of H1 had gross technical reserves worth 157.7m RON (over 44.5m euros), double the value reached in last year's H1
The main move the receiver has proposed to revive the company was to raise its share capital by 180.2m RON (51m euros)
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