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The authority also concluded that the company is already insolvent and its solvency keeps deteriorating.
Under existing regulations, the claims generated by the insurance policies issued by City will be processed from now on by the Insurance Guarantee Fund (FGA) but the payments will be disbursed only after City’s bankruptcy.
The government is reportedly drafting an emergency decree that would allow the FGA to disburse the money within 60 days after the insurer loses its operating licence.
According to sources familiar with the market, City’s portfolio will generate total claims in the amount of around €100mn.
City Insurance is 85% controlled, through Swiss-registered Vivendi International, by Odobescu.
ASF officials reported massive frauds at City Insurance, particularly after it took over the management of the company in June. Among the frauds spotted, City Insurance’s main owner reportedly siphoned off €18mn since 2017, according to ASF director Valentin Ionescu, who has investigated the case.
City Insurance has paid €18mn to its main shareholder, Vivendi International (Odobescu’s investment vehicle), for fictitious loans since 2017, disclosed Ionescu.
Specifically, City Insurance declared that it borrowed €50mn, €25mn, and another €50mn this year from Vivendi – but
the accounts in the Swiss banks indicated by the insurance company do not exist and Vivendi extended no loan to City while cashing interest rates of 10-12%.
Ionescu was appointed at ASF earlier this year, specifically to investigate the situation on the insurance market.
Nicu Marcu, the current ASF president who was appointed
in 2020, has launched extensive controls on insurance companies, including overseas operations. Before Marcu, in 2017-2020, the president of ASF was Leonardo Badea, the current vice-governor of the National Bank of Romania (BNR).
In an interview given to Radio Free Europe, Ionescu disclosed other irregularities at City Insurance such as understating the cost generated by the green cards issued, which had the effect of understating the capital requirements.
Serbia makes a strong recovery from a modest crisis
Clare Nuttall in Glasgow
Serbia was one of the best performers in the entire Emerging Europe region in 2020, with its economy contracting by a mere 1% during the pandemic year, in stark contrast to some of its neighbours. The economy is now on track for rapid growth this year – provided the latest wave of the pandemic doesn’t prove to be too much of a setback.
In the depths of the crisis in Q2 of last year, Serbia’s economy contracted by only 6.3%. By the first quarter of 2021, the economy returned to year-on-year growth. Serbia’s real GDP growth in the second quarter was 13.7%, exceeding the flash estimate of 13.4%.
The reasons behind this are a combination of the structure of its economy and Serbia’s fiscal strength at the start of the pandemic that allowed it to offer a series of big stimulus packages.
Five years before the crisis, back in February 2015, Serbia embarked on a fiscal consolidation programme with the support of the International Monetary Fund (IMF). In 2017, the country reported its first consolidated budget surplus since 2005 after significantly improving its public finances.
By the end of the precautionary €1.2bn three-year IMF stand-by
Serbia GDP annual y/y
Serbia GDP growth y/y
Source: Serbia state statistics agency
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