Bulgaria’s Financial Supervision Commission (FSC) has revoked the insurance license of ZAD DallBogg: Life and Health AD – a company that serves over 900,000 clients in Bulgaria and abroad.
The decision was motivated by a serious established deficit in the company's technical reserves and failure to comply with imposed restrictions on asset disposal.
"This is the most severe measure possible. In order to reach it, we had to have very serious grounds. Within one year, we established many worrying things," stated FSC chairman, Vasil Golemanski. He emphasised that the decision is the result of consecutive audits and the company's inability to present and implement a realistic plan for restoring its solvency.
Golemanski pointed out a number of key reasons for the license revocation.
"According to a decision from 9 April, the insurer had to present a short-term realistic plan for restoring eligible basic own funds or for limiting the risk profile in order to ensure coverage of the minimum capital requirement. On May 11, the insurer presented such a plan, which the FSC reviewed and evaluated thoroughly, finding that it was obviously inadequate. We do not approve this plan. This is one of the main reasons for the license revocation," he explained.
The second pillar of the decision is the state of the technical reserves. "As a result of the audits, a significant hole in the insurer's technical reserves was established. I am talking about almost €280m," Golemanski added.
According to Golemanski, the law clearly defines the procedure by which the company must restore its solvency within three months.
Golemanski also pointed out another group of grounds – non-compliance with imposed compulsory administrative measures.
"Another ground for the license revocation is that the company has not fulfilled several compulsory administrative measures imposed on it by the FSC. Among them is the measure imposed on 2 April regarding the non-disposal of assets. Within this two-month period, we established that despite this measure, the company made various payments that are in violation of the imposed ban," he said.
ZAD DallBogg: Life and Health AD claimed that it "has money" and has "liquidity", accusing the regulator of "deliberately manipulating the data".
