More than one fifth of the companies operating on the insurance market are facing solvency issues, the Insurance Supervision Commission (CSA) said yesterday. This is the first official announcement of the Commission regarding the insurers in Romania and the compulsory solvency level, the main indicator of the financial health of the insurance companies.
"We have analysed the solvency margin reports sent by 42 insurers and we have concluded that three companies are insolvent, with a low insolvency risk present for another six companies," CSA chairman Nicolae Crisan yesterday told the International Insurance Reinsurance Forum organised by Media Xprimm.
The solvency level shows a company's capacity to meet its obligations. Theoretically, it is not recommended to use the services of an insurer that features a certain liquidity risk or is even threatened by insolvency.
Crisan would not name the respective companies, stating "these are preliminary data, which will be verified with the help of accounting information." The final data will be presented by June 30, 2003, in the report on last year's evolution of the insurance market.
The solvency margin is thus likely to have a harder impact on insurers than the minimal capital redoubling did. "Only two companies failed to increase capital to the new limits requested by law: Uniroyal, which did not even operate in 2002, and Prima, which did not have the right to issue policies, anyway," Crisan added.
Although he did not point to those companies that failed to meet the solvency criteria, according to preliminary reports, Crisan did speak about companies that will need a capital increase soon: Astra Asigurari (Astra Insurance), Croma and Unita. The last two companies are already applying financial recovery strategies.
"We have rather discouraging signs coming from Astra, so that we are looking at options to put the company back on line. We do have some reservations regarding the figures presented by the company. There are discrepancies between reports and the accounting sheets. According to our data, a cash infusion worth several million dollars is needed. We have not asked for a financial recovery plan, yet, but we will if we have to," Nicolae Crisan maintained.
On the other hand, Astra VP Dan Domnitanu is surprised at the statements of CSA officials. "We are surprised at the statements of the CSA president. The commission has sent no releases or notices pointing to this issue. Astra is on a positive trend, sales have posted a significant increase and the market reacts positively to Astra and its results," Domnitanu said.
sorin.pislaru@zf.ro
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