New capital increases put 14m euros on insurance market

Insurance firms’ shareholders are investing around 14 million euros this year to abide by the guidelines set by the Insurance Supervision Commission (CSA) regarding the minimum share capital of insurers.
This is the first stage in the process whereby insurers are increasing their share capital, a process that started last year in order to comply with EU directives. ABC Asigurari, Asito Kapital, Asigurari Global and City Insurance have already finalised their share capital increases. Almost all of the other 11 companies needing additional capital are in an advanced phase of the process. These companies are going to operate capital increases totalling a value of almost 11 million euros in order to meet the requirements of the CSA.
The shareholders of Euroasig, companies of the VGB group, are awaiting the Prosecutor’s Office approval to boost the capital of the insurance company, as VGB managers, Iancu brothers, stand accused in the Rafo file.
Generally, it is small companies, owning market shares below 1%, which need additional capital. Despite their low turnovers, these companies are staying on the market because they do business with shareholders or are companies operating in niche markets.
This is the second wave of share capital raises that started at the end of last year, when insurers operated capital increases standing at almost 17 million euros.
According to the Commission regulations, as of July, insurance companies will have to hold a share capital worth above a certain limit, depending on the type of policies they sell. Thus, in the case of companies operating on the life insurance market, except compulsory insurance (auto liability insurance), the threshold will be around 2.3 million euros (8 million RON).
Companies operating in the general or life insurance sector must have a minimum capital of 3.4 million euros (24 million RON). The capital requirements for those operating on both sectors are some 6.8 million euros (24 million RON).
Should an insurer not raise its share capital by June 30th, the deadline set by the CSA, it will lose its licence. In this case, the insurance company has to transfer its portfolio within six months since the date its licence was revoked. Companies in this situation can resume activities provided that they operate a capital increase to meet the requirements of the CSA within six months from losing their licence.
Only a handful of companies have injected capital above the threshold imposed by the CSA.
Earlier this year, the CSA withdrew several licences from the insurers ABG Insurance, Mediterranea Assicurazioni (Medas), Mondial Assurances, Omniasig Addenda and Nationala, after the respective firms failed to operate capital raises in line with Commission norms.