CITR: Euroins creditors can request payments of up to four billion lei

Euroins' creditors, numbering almost 1,200, can demand payments of up to four billion lei from the bankrupt insurer, of which 842 million lei are currently certain claims, according to the CITR report on the causes of Euroins' bankruptcy.

Paul-Dieter Cîrlănaru, CEO of CITR, the judicial liquidator of Euroins, said: "The preparation of the report on the cases is an essential stage in the bankruptcy procedure. On the one hand, it concludes the stage of the historical and contextual analysis of the reasons that led to the bankruptcy, on the other hand, it provides the procedural framework for their debate with the aim of protecting the creditors' interests as much as possible".

From the analysis of the indicators, CITR found that the largest share of insurance classes in the Euroins portfolio was held by the RCA insurance class (over 95% in 2022), followed by guarantees (over 1% in 2022) and insurance for land transport means (0.97% in 2022). The business line focused on RCA insurance brings losses from the perspective of increased claims, while other insurance companies record an average RCA insurance of 54% in the year 2022.

According to the report, the identified causes of the Euroins bankruptcy are:

-Non-fulfillment of solvency indicators: the company's own funds to cover potential liabilities to all policyholders and reinsurers were insufficient. On September 30, 2022, the own funds needed to cover the SCR were in the amount of 2.2 billion lei, and those needed to cover the MCR were in the amount of almost 1.8 billion lei;

-The claims reserves were below the adequate level to cover the potential claims of the insured, a result that also emerges as a result of the specific tests prepared by Euroins. As a result of the inventory of the damage files and the litigation files regarding the alleged damages, the judicial liquidator found a difference of one billion lei between the records existing at the time of the opening of the bankruptcy procedure and the result of the inventory, from approximately 600 million lei to 1, 7 billion lei;

-Non-payment of damages on time, which led to an exponential increase in the risk of triggering forced execution procedures, which led to the reduction of the company's patrimony through the accumulation of additional expenses compared to the damages to be paid. Only the amounts in the form of penalties are over 300 million lei, to which are also added the costs of execution;

-Lack of steps regarding the recovery of debts and loans granted;

-The inefficiency of the recovery of receivables from recourses: on December 31, 2022, according to the company's accounting records, there were unrecovered amounts of 15.5 million lei. To these are added unrecovered amounts from the category of miscellaneous debtors of almost 60 million lei;

-The conclusion of the contract with EIG Re through which financial assets were transferred from the company, consisting of securities, receivables to be recovered from reinsurance and availability in accounts, in a total value of over 1.5 billion lei, a contract that is submitted for analysis by the syndic judge;

-Losses resulting from the realization of placements: during the period 2019-2023, CITR centralized their value, which amounts to 18.3 million lei; Constant losses recorded at the level of insurance activity, on different classes of insurance, reaching the maximum in 2022, when losses of 917.6 million lei were recorded for RCA.

Among the elements that led to the opening of the bankruptcy procedure, the judicial liquidator identified facts that fall under Article 268 of the Insolvency Law, for which the syndic judge can order that the damage be borne by the members of the management and/or supervisory bodies within the company, as well as by any other person who contributed to the insolvency of the debtor by committing one of the acts expressly provided for by law, according to the report.

According to CITR's presentation, at the time the bankruptcy proceedings were opened, there were over two million RCA Euroins policies. On December 8, over 800,000 RCA policies expired by law, and on February 5, over 2,300 guarantee policies expired by law. There were also over 25,000 disputes, of which over 13,000 disputes are now under management.

To date, the amount of 5.7 million lei has been recovered from the totality of asset sales. 1,194 creditors are registered in the credit table, the certain claims being worth 842 million lei, the rest of the amounts requested being worth 3.166 billion lei.

In June last year, the court ordered the opening of Euroins bankruptcy proceedings, and CITR was appointed judicial liquidator. The next stages that will be carried out in the bankruptcy procedure of the insurer by the judicial liquidator will consist of: finalizing the sale of the remaining assets in the company's patrimony; recovery of its claims; reorientation of the company in the more than 25,000 litigations in which it is a party; investiture of the syndic judge with the request to bring the liability of the persons whose actions led to the opening of the bankruptcy procedure, according to the CITR report.