​The Policyholder Guarantee Fund (FGA) has paid out more than €150m to City Insurance claimants between the end of November 2021 and Friday 10 March 2023, with almost €28m of that in the first 2 months of this year alone, figures provided by HotNews.ro FGA request.

In the context of the scandal caused by the increase in RCA base rates, the statements of PSD leader Marcel Cholaku about the possible new bankruptcy of RCA and the concerns expressed by the government, which is awaiting the results of the control launched by the ASF on the solvency of Euroins, the Bulgarian group Eurohold reacted, stressing that it “recently consolidated the financial state” of Euroins Romania outside the requirements of the law.

Eurohold Group has released new details of the reinsurance contract signed by Euroins Romania with EIG Re, the reinsurer of Euroins Insurance Group (EIG), saying “the total value of the reinsured risk transferred to EIG Re is 1.5 billion lei (over €300 million)”.

What resources does the FGA have and what does it say when asked if it can still handle the RCA bankruptcy

In this context, HotNews.ro asked the Insurers’ Guarantee Fund (FGA) to clarify what financial resources it currently has and whether it can support the new bankruptcy of RCA.

Here is the FGA’s response:

“On March 10, 2023, the financial availability of the FHA was 180.3 million lei.

In accordance with Article 5 of Law 213/2015, with the following amendments and additions, the Fund can meet its liquidity needs at the expense of the following resources:

• policyholders’ contributions to the Fund;
• penalties and penalties for late payment of premiums by policyholders;
• sums from the fruiting of Fund funds;
• sums from the collection of claims of the Fund;
• amounts received from legal interest related to loans granted to the Rehabilitation Fund for insurers administered by the Fund;
• amounts from other sources established in accordance with the law;
• loans from credit institutions or mandatory loans by issuing securities of the Fund;
• interest or taxes in connection with any loans or guarantees provided to the insurer, in accordance with the resolution, in accordance with the provisions of Art. 59 liters b) from Law No. 246/2015.

In order to fulfill its obligations to insurance creditors, the FGA will apply the provisions of Law No. 213/2015, carrying out a periodic analysis on the evolution of registered payment requests and the relevant provisions, as well as on the basis of constantly updated data and information, evaluations on the evolution of contribution income, as well as legislative changes, the FGA will propose changes to available funds as the situation warrants.

At the same time, the staffing schedule of the Fund is flexible, which can be changed in the event of an increase in the volume of the Fund’s activities. The personnel structure of the FGA includes a permanent structure and an operational (flexible) structure, the size of which will change according to the need,” FGA representatives told HotNews.ro.

Under what conditions can FGA take over the management of a troubled insurance company?

The FGA explained to HotNews.ro under what conditions it can take over the management of an insurance company that has found itself in a difficult situation:

• “According to the provisions of Law no. 213/2015, in addition to the main objective of protecting insurance creditors, the FGA may perform other functions such as temporary administrator temporarily work with the managing body of the insurer or for its temporary replacement in order to maintain or restore its financial position and ensure sound and reasonable management of the insurer’s activities, i.e. permission administrator to carry out settlement measures, functions carried out in accordance with the provisions of Law no. 246/2015 or one of temporary administratorappointed in accordance with Law No. 213/2015.
• The appointment of an FGA to perform one of these functions is carried out by the ASF, that is, the FGA always has within its structures trained specialists who can take on and carry out the duties established in accordance with the mandate given by the authority. They have proven their experience over time, FGA is involved in performing these functions in several insurance companies.
• In the case of appointing the Fund as a temporary administrator of the insurer by the decision of the ASF, it will take all necessary measures to fulfill the mandate, appointing a group of specialists in this regard.” said FGA representatives.

What payments did the FGA make in the case of the major bankruptcies of Astra, Carpatica and City Incurance

To this question, FGA officials stated that “by March 10, 2023, FGA had made the following payments:

• – For the ASTRA company: 557.3 million lei
• – For CARPATICA company: 501.9 million lei
• – For the CITY company: 739.9 million lei (over 150 million euros)

It should be emphasized that in January of this year, FGA announced that between 29 November 2021 and the end of 2022, it paid the insurance creditors of City Insurance SA approx. 603 million lei for 64,568 payment requests approved by the FGA Special Commission out of a total of 250,692 registered payment requests.

We will remind you that in September 2021, the ASF revoked the permission to operate in City Insurance, and the final decision on the bankruptcy of this insurer was made by the court in May 2022.

In the first phase, the FGA registered 260,764 payment requests, but as a result of the internal review process, 10,072 payment requests were closed as duplicates or added to other previously registered payment requests.