CITR has completed the report on the causes for the City Insurance bankruptcy
CITR, City Insurance’s liquidator, has identified a series of operational and fund management reasons which led to the bankruptcy of the largest insurance company, with a 43 % market share on the RCA (motor vehicle liability) market in 2021. The report of reasons is a very complex document, which the CITR team have managed to complete in just 4 months, a brief term considering the specificity and size of the case.
With 1.15 million RCA policies in force at the end of the last year, of which 500,000 automatically terminated on May 11th, 16,305 surety policies still in force today, related to over 7,000 insured individuals, institutions, and other legal entities, and also over 10,000 national and international litigations, the City Insurance bankruptcy is the largest in Romania's recent history.
Paul Dieter Cîrlănaru, CITR CEO: “Today, upon the completion of a complex analysis, we have a clearer image of the elements which led to the most resounding bankruptcy on the insurance market. There still are stages to follow until we can deem this file closed, one that I wish would be used, over the years, as a case study for us all to learn valuable lessons. Nevertheless, we have the obligation to understand how this endemic situation was reached, in order to avoid repeating it. Next, we will formulate the applications for joint liability in the case of the events leading up to the City bankruptcy, and the competent courts will be able to act accordingly.”
Among the operational reasons in the insurance activity, there is a significant deficit, of RON 1.2 billion, resulted from selling policies below the notified fee, with the aim of increasing market share, as resulting from the analysis of City Insurance's activity over 2018 – 2021.
Additional RON 422 million losses were generated from City’s not acting towards collecting reinsurance debts, while another RON 54 million resulted from the company’s failure to collect redress claims.
Other loss sources were the failure to pay claims on time, leading to penalties and enforcement fees in excess of RON 45 million, while the constant losses of the Greek and Italian subsidiaries between 2017-2021 created a deficit of RON 185 million.
CITR has also found deficiencies in money management. Thus, City Insurance paid interest and success fees of RON 147 million related to loans from the majority shareholder and from a foreign company, loans which were not used by the company.
Added to this are also losses of RON 57 million, generated by the failure to collect loans granted to the affiliated company City Invest & Management.
Other loss sources are represented by some real estate transactions with plots of land purchased for high values between 2012 – 2014, which were subsequently sold for lower prices between 2019-2020, leading to a difference of RON 42.6 million.
ITR, City Insurance’s liquidator, has identified a series of operational and fund management reasons which led to the bankruptcy of the largest insurance company, with a 43 % market share on the RCA (motor vehicle liability) market in 2021. The report of reasons is a very complex document, which the CITR team have managed to complete in just 4 months, a brief term considering the specificity and size of the case.
With 1.15 million RCA policies in force at the end of the last year, of which 500,000 automatically terminated on May 11th, 16,305 surety policies still in force today, related to over 7,000 insured individuals, institutions, and other legal entities, and also over 10,000 national and international litigations, the City Insurance bankruptcy is the largest in Romania's recent history.
Paul Dieter Cîrlănaru, CITR CEO: “Today, upon the completion of a complex analysis, we have a clearer image of the elements which led to the most resounding bankruptcy on the insurance market. There still are stages to follow until we can deem this file closed, one that I wish would be used, over the years, as a case study for us all to learn valuable lessons. Nevertheless, we have the obligation to understand how this endemic situation was reached, in order to avoid repeating it. Next, we will formulate the applications for joint liability in the case of the events leading up to the City bankruptcy, and the competent courts will be able to act accordingly.”
Among the operational reasons in the insurance activity, there is a significant deficit, of RON 1.2 billion, resulted from selling policies below the notified fee, with the aim of increasing market share, as resulting from the analysis of City Insurance's activity over 2018 – 2021.
Additional RON 422 million losses were generated from City’s not acting towards collecting reinsurance debts, while another RON 54 million resulted from the company’s failure to collect redress claims.
Other loss sources were the failure to pay claims on time, leading to penalties and enforcement fees in excess of RON 45 million, while the constant losses of the Greek and Italian subsidiaries between 2017-2021 created a deficit of RON 185 million.
CITR has also found deficiencies in money management. Thus, City Insurance paid interest and success fees of RON 147 million related to loans from the majority shareholder and from a foreign company, loans which were not used by the company.
Added to this are also losses of RON 57 million, generated by the failure to collect loans granted to the affiliated company City Invest & Management.
Other loss sources are represented by some real estate transactions with plots of land purchased for high values between 2012 – 2014, which were subsequently sold for lower prices between 2019-2020, leading to a difference of RON 42.6 million.
