Recently, in the specialized press there have been published several articles on the current situation of SAR City Insurance, with special reference to the stage of implementing the financial recovery program and fulfiling the measures plan implemented consequently to the decisions of FSA. We refer here to the FSA press release dated April 11, 2017, as well as to the articles published in the period April 11-12, 2017.
Since beside the raw information in those articles also comments, speculations and contradictory statements have been made, and some of them essentially untrue, for the accurate information of the public opinion, particularly of our policyholders, we bring the following CLARIFICATIONS:
- On March 15, 2017, City Insurance Insurance-Reinsurance Company notified FSA on the fulfilment of the measures set and approved by the authority, including in terms of the implementation of a 30 million Euro funding mechanism imposed by the decisions of FSA Council as a financing requirement (this measure has already been reported as complied with during the month of December 2016). We mention that the notification, as well as the type of funding to which the company resorted, have been validated by an external auditor. Nevertheless, FSA management expressed reserves with respect to this solution, ignoring the legal provisions, the practice arguments and experts’ opinions in this field;
- Wishing to overcome the situation created and to ensure the best conditions required for carrying on the insurance-reinsurance business, we informed FSA that we intend to supplement the capitalization operations by two other distinct financial operations, namely:
– replacing the funding mechanism previously specified with a subordinate loan amounting to Euro 50 million, amount which is already deposited in the accounts of the company.
– increasing the share capital by attracting a new investor, already publicly agreed by the management of FSA, by a contribution in cash up to 50 million Euro.
- FSA decisions that refer to the penalization of some representatives of City Insurance- by applying fines and suspending the permit to occupy certain positions – refer to natural persons, have no direct causal link with the company business and may be contested by those concerned. We cannot help noticing the somewhat ostentatiously way of mentioning the attribute of “brother-in-law” of one of the persons concerned, which makes us think that they are trying to square some accounts and sacrifice the interests of an insurance company for some personal wars. How justified such a conduct is remains to be judged by the public opinion.
12 April 2017