SUMMARY REPORT OF THE ANALYSIS OF THE RESULTS OF BSRE TEST

Transcription

1 SUMMARY REPORT OF THE ANALYSIS OF THE RESULTS OF BSRE TEST 1. Purpose of BSRE The main purpose of BSRE was to assess the readiness of 21 insurance undertakings in the Romanian market which did not participate in the BSR test to meet the requirements of the Solvency II regime, as of 1 January As in the BSR test, the purpose of BSRE was also to comprehensively assess the financial soundness and solvency of the participating undertakings under Solvency I regime, through the analyses made for the reference date 31 December 2014 (as compared to the BSR test, where the reference date was 30 June 2014) by 7 independent financial auditors, with extensive international experience, selected by each participating undertaking. The timeframes for the overall development of this exercise were shorter, given the short period of time until the end of the year. The results of the BSRE test may not be analysed in combination with the results of the BSR test because the reference dates, timeframes and market shares of the participating undertakings are different. The BSRE test was conducted under the supervision of the Vice-President and Supervision and Control Directorate of FSA s Insurance-Reinsurance Sector. Its key milestones were the reference terms and methodological guidance of BSR, which were adapted in such a way as to meet the scope, timeframes and market share of the participating undertakings. 1/8

2 2. Scope of BSRE No. Participating undertaking Referred to as Total gross written premiums in 2014 thousand RON Market share (%) 1 ABC Asigurari Reasigurari SA ABC 24, % 2 ASITO Kapital SA Asito Kapital 12, % 3 Asigurare Reasigurare Asimed SA Asimed 1, % 4 ATE Insurance Romania SA ATE 2, % BCR Asigurari de Viata 5 Vienna Insurance Group SA BCR Viata 143, % 6 BRD Asigurari de Viata SA BRD Viata 77, % CERTASIG Societate de Asigurare si 7 Reasigurare SA Certasig 58, % Societatea de Asigurare - Reasigurare 8 CITY Insurance SA City 361, % 9 CREDIT Europe Asigurari Reasigurari Credit SA Europe 42, % 10 ERGO Asigurari de Viata SA Ergo 24, % 11 Eurolife ERB Asigurari Generale SA ERB Generale 7, % 12 Eurolife ERB Asigurari de Viata SA ERB Viata 74, % 13 FATA Asigurari SA Fata 26, % 14 FORTE Asigurari Reasigurari SA Forte 20, % 15 GARANTA Asigurari SA Garanta 41, % 16 GOTHAER Asigurari - Reasigurari SA Gothaer 84, % 17 GRAWE Romania Asigurare SA Grawe 48, % Societatea de Asigurare Reasigurare 18 LIG Insurance SA LIG 118, % 19 ONIX Asigurari SA Onix 25, % 20 SIGNAL Iduna Asigurare Reasigurare Signal SA Iduna 27, % 21 UNIQA Asigurari de Viata SA Uniqa Viata 7, % Total 1,231, % 3. Solvency I results The reviews made by the auditors in the BSRE test impacted both the assets and liabilities of the balance sheets of the 21 participating undertakings. The total aggregate downward adjustments applied by auditors to total assets amounted to RON 80.6 million (2.3% of total assets of the participating undertakings prior to the BSRE test). In the case of 15 undertakings, the auditors of the test adjusted downward the value of assets as compared to the on-balance-sheet values recorded by undertakings as at 31 December The highest adjustments were made for Credit Europe (23%), LIG (22%), Forte Asigurari (18%) and ABC (16%). No adjustments were made in the case of 3 undertakings, while upward adjustments were made for another 3 undertakings. 2/8

3 With respect to liabilities, auditors identified cases of undervaluation for non-life insurance liabilities, which resulted in an upward adjustment of the non-life technical provisions of RON 72.4 million for a number of 9 insurance undertakings. Adjustments of technical provisions for City and LIG accounted for 82% of total adjustments on such category. Auditors adjusted the life technical provisions for 3 undertakings, the aggregate value being minus RON 600 thousand, due to the reduction in the technical provisions by RON 967 thousand of ERB Viata. For both categories of insurance, adjustments accounted for just over 9% of the value of technical provisions prior to the test. BSRE also determined an aggregated downward adjustment of RON 122 million in the aggregated total equity of the participating undertakings (16.3% of total equity of the participating undertakings before BSRE). Downward adjustments were made to the equities of 15 undertakings as at , and for one undertaking (i.e. Garanta) adjustments were made upward, i.e. increase in the equities. One out of the 21 participating insurance undertakings (i.e. LIG) has negative equities after adjustments (adjustment of -175%). Significant adjustments were also made for: Forte (-61%), Certasig (-46%), ABC (-38%) and City (-26%). Equity Balance sheet reported to FSA as at Auditor adjustments -thousand RON- Balance sheet adjusted as at Asimed 19,150-2,169 16,981 BRD Viata 54, ,680 Gothaer 27, ,247 Grawe 62, ,343 Uniqa Viata 25, ,705 City 88,606-23,690 64,916 Forte 24,083-14,732 9,351 BCR Viata 114, ,026 ABC 17,859-6,825 11,034 Onix 39,298-2,826 36,472 ATE 16, ,892 LIG 36,318-63,581-27,263 Asito Kapital 17,850-2,148 15,702 Garanta 57,142 5,136 62,278 ERB Viata 28,738-1,362 27,376 ERB 23, ,640 Certasig 18,403-8,458 9,944 Fata 17, ,813 Signal Iduna 18, ,788 Ergo 23, ,552 Credit Europe 19, ,765 Total 752, , ,244 3/8

4 As a result of the adjustments made to equities, the solvency ratios of Forte, ABC, Asito Kapital and Certasig were below 100%, and LIG s solvency margin was negative. The solvency ratios of all other insurance undertakings exceeded 100%. Participating undertaking State of solvency Life Non-Life Asimed - 104% BRD Viata 157% - Gothaer - 156% Grawe 231% 124% Uniqa Viata 141% - City - 133% Forte - 55% BCR Viata 395% - ABC - 67% Onix - 222% ATE - 102% LIG % Asito kapital - 96% Garanta 218% 130% ERB Viata 168% - ERB - 145% Certasig - 60% Fata - 103% Signal Iduna 113% - Ergo 146% - Credit Europe - 118% The BSRE test showed that the aggregate admitted assets (for life and non-life insurance) of RON 2.7 billion are sufficient to cover the adjusted technical provisions (RON 2.4 billion), which results in a degree of coverage of 112.5%. At individual level, 3 non-life undertakings, i.e. Forte, LIG and Certasig do not have sufficient assets admitted to cover non-life commitments. 4/8

5 Participating undertaking Coverage degree of provisions Life Non Life Asimed - 174% BRD Viata 121% - Gothaer - 122% Grawe 107% 1285% Uniqa Viata 198% - City - 101% Forte - 88% BCR Viata 114% - ABC - 108% Onix - 105% ATE - 162% LIG - 81% Asito Kapital - 137% Garanta 188% 130% ERB Viata 136% - ERB - 481% Certasig - 89% Fata - 153% Signal Iduna 159% - Ergo 106% - Credit Europe - 130% Total 115% 111% Based on the BSRE results and having regard to the requirements of Solvency I regime, the participating insurance undertakings were classified in the following groups: 1) Group 1 insurers: insurance undertakings with negative equity - LIG; 2) Group 2 insurers: insurance undertakings which do not have an available solvency margin larger than the guarantee fund - Forte, ABC, Asito Kapital, Certasig; 3) Group 3 insurers: insurance undertakings which do not have an available solvency margin larger than the minimum solvency margin - no such cases identified; 4) Group 4 insurers: insurance undertakings which do not have assets admitted to cover the gross technical provisions larger than gross technical provisions - Forte, LIG, Certasig; 5/8

6 5) Group 5 insurers: insurance undertakings which meet the solvency requirements (e.g., available solvency margin larger than minimum solvency margin and guarantee fund) - 16 undertakings, i.e. Asimed, BRD Viata, Gothaer, Grawe, Uniqa Viata, City, BCR Viata, Onix, ATE, Garanta, ERB Generale, ERB Viata, Ergo, Signal Iduna, Fata and Credit Europe. Thus, out of the total number of 21 insurance undertakings participating in the BSRE test for the reference date , 5 undertakings (Forte, ABC, Asito Kapital, Certasig and LIG), covering risks only of the non-life insurance category, do not meet, after the adjustments made by auditors, the legal requirements on solvency, of which 3 (Forte, Certasig and LIG) do not meet the requirements on coverage of technical provisions with admitted assets either. 4. Solvency II results On 31 December 2014, the total value of assets for the 21 undertakings was, under Solvency II regime, RON 3.2 billion. The aggregate surplus of assets over liabilities of the 21 participating insurance undertakings was RON 713 million, while the only undertaking with equity deficit was LIG, with negative own funds of RON 67 million. Given the specific assessment framework of Solvency II prudential regime, total assets at aggregate level decreased by 10% as compared to the aggregate on-balance-sheet values as at 31 December 2014, and by 8% as compared to the values adjusted by auditors. At individual level, 19 out of the 21 participating insurance undertakings (except for Asimed and Grawe) had their total assets reduced under Solvency II regime as compared to the adjusted value of assets under Solvency I regime. Signal Iduna (39%), Certasig (34%), LIG (33%) and ABC (18%) had the highest reductions in the value of assets under Solvency II regime. On 31 December 2014, the total own funds available to cover SCR for the 21 insurance undertakings were approximately RON 701 million, while the total own funds eligible to cover SCR were RON million. Given that SCR accounted on the reference date for RON 596 million, SCR coverage ratio was approximately 118%. On 31 December 2014, the total own funds eligible to cover MCR for the 21 insurance undertakings were RON 697 million. Given that MCR accounted on the reference date for RON 407 million, MCR coverage ratio was 171%. 6/8

7 Participating undertaking s Own funds Eligible funds to cover SCR Eligible funds to cover MCR Capital requirement SCR MCR Surplus /deficit own funds to SCR Surplus /deficit own funds to MCR Surplus/Deficit SCR percentage -thousand RON- MCR percentage Asimed 16,748 16,748 8,861 16,584 7, % 101% BRD Viata 95,313 95,313 51,983 27,789 43,330 67, % 343% Gothaer 14,538 12,119 32,114 16,583-17,575-4,465 45% 73% Grawe 73,236 73,236 26,167 32,663 47,069 40, % 224% Uniqa Viata 20,238 20,238 7,276 16,586 12,962 3, % 122% City 75,871 75, ,898 25,974-28,027 49,897 73% 292% Forte 11,855 11,855 28,360 16,583-16,505-4,728 42% 71% BCR Viata 150, ,964 49,169 16, , , % 910% ABC 13,696 13,696 12,252 16,584 1,444-2, % 83% Onix 44,621 44,621 43,837 16, , % 269% ATE 16,035 16,034 13,084 16,584 2, % 97% - LIG -67,035-67,035 52,625 23, ,660-90, % -283% Asito Kapital 16,741 16,357 9,850 16,584 6, % 99% Garanta 81,756 81,756 27,168 32,663 54,587 49, % 250% ERB Viata 27,639 27,639 13,517 16,322 14,122 11, % 169% ERB 23,856 23,856 6,862 16,331 16,994 7, % 146% Certasig 16,730 16,730 28,261 16,584-11, % 101% Fata 13,238 13,238 7,765 16,331 5,474-3, % 81% Signal IdunA 6,989 5,947 9,506 16,322-2,518-10,375 74% 36% Ergo 27,483 27,483 6,540 16,590 20,943 10, % 166% Credit Europe 20,283 20,283 56,603 16,584-36,320 3,699 36% 122% Total 700, , , , , , % 171% At individual level, one undertaking (LIG) out of the 21 participating insurance undertakings had, on 31 December 2014, negative own funds (RON -67 million), while three other undertakings, i.e. Signal Iduna, Forte and Gothaer do not meet any of the capital requirements laid down by Solvency II regime (SCR and MCR). Three undertakings which meet the minimum capital requirement (MCR), i.e. Certasig, Credit Europe and City do not have the financial capability to cover the solvency capital requirement (SCR). Four undertakings, i.e. Fata, ABC, ATE and Asito Kapital, have own funds eligible to cover SCR, but do not have sufficient own funds so as to cover the minimum capital requirement (MCR), determined by applying the minimum threshold of MCR, which exceeds in these cases the SCR value. 7/8

8 The other ten undertakings meet the solvency requirements imposed by Solvency II, while SCR of nine undertakings exceeded 180%. Based on the BSRE results and having regard to the requirements of Solvency II regime, the participating insurance undertakings were classified in the following groups: 1) Group 1 insurers: insurance undertakings with negative own funds - LIG; 2) Group 2 insurers: insurance undertakings which, based on the BSRE results and without prejudice to any of the subsequent adjustment measures taken after the test, do not meet the minimum capital requirement (MCR) Signal Iduna, Forte, Gothaer, Fata, ABC, ATE and Asito Kapital; 3) Group 3 insurers: insurance undertakings which, based on the BSRE results and without prejudice to any of the subsequent adjustment measures taken after the test, do not meet the minimum solvency requirement (SCR) Signal Iduna, Forte Asigurari, Gothaer, Certasig, Credit Europe and City; 4) Group 4 insurers: insurance undertakings which, based on the BSRE results, meet MCR and SCR - Onix, Brd Viata, Asimed, ERB Generale, ERB Viata, Uniqa Viata, Grawe, Garanta, BCR Viata and Ergo. Thus, out of the total number of 21 participating insurance undertakings, 4 undertakings do not meet the minimum capital requirement (MCR), but cover the solvency capital requirement (SCR), 3 undertakings do not meet SCR, but cover MCR, 4 undertakings do not meet both MCR and SCR and the other 10 undertakings comply with Solvency II regulatory framework. 8/8