Five smaller Romanian insurers have failed the stress tests recently carried out by the Financial Supervisory Authority (ASF).

The ASF has completed the evaluation of assets and liabilities (Balance Sheet Review Extended – BSRE) for another 21 insurance companies that hold a 20% market share.

The main purpose of BSRE was to assess the readiness of the participating insurers to meet the requirements of the Solvency II regime, to enter into force on January 1, 2016, and to assess their financial soundness and solvency under Solvency I regime.

The results show that five local insurers failed to comply with the Solvency I requirements. One of the insurers (LIG) had negative equity while four (Forte, ABC, Asito Kapital, and Certasig) did not have an available solvency margin larger than the guarantee fund, according to data available at December 31, 2014. Three of the insurers (Forte, Certasig, and LIG) did not meet the requirements on coverage of technical provisions with admitted assets either.

When it comes to the Solvency II requirements, 11 of the 21 insurers didn’t meet the minimum capital requirements, the solvency capital requirements or both. Among these were the five above, as well as Signal Iduna, Gothaer, Fata, ABC, ATE, Credit Europe, and City.

The insurers that have failed the tests must come up with action plans to restore their financial indicators.

Signal Iduna and Gothaer both rejected the ASF’s conclusions saying they respected the Solvency II requirements.

The stress tests carried out on big insurers earlier this year showed that four insurers (Astra, Euroins, Carpatica Asig, and Exim Asig) didn’t meet the solvency requirements. Astra was declared bankrupt by the ASF in August.

editor@romania-insider.com