Romania's largest insurance firm Astra was recently placed under special administration by the country's Financial Surveillance Authority ASF and will be managed by consultancy firm KPMG.

ASF decided to suspend the shareholders and the management of Astra, in order to help the firm recover financially, according to the authority's release.

The special administrator KPMG will take over all the management and shareholders' attributions. The new administrator will have to start procedures to increase the social capital so as to comply with the national regulations.

Two weeks ago, ASF was suspecting Astra Asigurari of having purposely undervalued the damages it was supposed to pay, so its reserves were 40 percent below the required level, according to Mediafax newswire.

Following this recent decision, all of Astra Asigurari's insurance contracts and cases, including those where damages need to be paid, will be re-evaluated. During this period, Astra Asigurari will not be able to make stock or real estate investments, except invest in bank deposits and state titles, and it will not be allowed to sell assets without ASF's approval.

Astra Asigurari recently agreed to take over Axa insurance firm in Romania, but the deal is not yet finalized. Astra Asigurari reported revenues of some EUR 133 million from premiums in the first half of 2013, up 16 percent on the same period of 2012. The company, which has been active since 1991, is controlled by The Nova Group Investments România – 72 percent of the shares, and Epsilon Estate Provider SRL- 27 percent, plus a group of individuals and companies who control the rest. Both companies are owned by businessman Dan Adamescu, who also owns the Intercontinental Hotel in Bucharest.

editor@romania-insider.com