On October 3, 2005, the Financial Supervision Commission passed a resolution on divestiture of the licence issued to Hildon AD Insurance Company (formerly Jupiter AD Insurance Company) to perform insurance activity.
The following grounds for the divestiture of the aforesaid licence to perform insurance activity have been established:
Upon an on-site inspection undertaken and while carrying out current supervision, it has been ascertained that the company is in bad financial standing and it may not duly perform its obligations under insurance contracts.
Numerous breaches have been established, such as considerable understatement of the insurance reserves with at least BGN 909 thousand, considerable shortage of assets needed to cover the reserves with at least 95.2 per cent, fictitious considerable enhancement of the company’s financial result resulting from incorrect accountability with at least BGN 3,519 thousand. The company has been submitting erroneous financial information to the supervisory institution, where by so doing the said company has obstructed the establishment of its actual financial standing.
Unjustified non-payment, delayed payment and partial payment of exigible and liquid liabilities under insurance contracts have been ascertained.
It has also been established that the company does not pay or delays payments on liabilities under insurance contracts incontestably established through the court (13 execution actions to a total amount exceeding BGN 200 thousand).
Upon an inspection undertaken at the company and at the judicial executive office, it has been ascertained that the said insurer has not been implementing the coercive administrative measure imposed by the FSC in 2004, under which the above insurer was obligated to remove the infringements established in its activities with regard to liquidation of damages and to undertake the necessary measures for the prompt payment of all amounts due under insurance contracts.
The breaches established are substantial and numerous, and each one of these alone is a legal basis for licence divestiture.
With its actions, the company has injured social relations of considerable importance with regard to the insured persons, the stability, the transparency of and trust in the insurance market. As of the present moment, the measures undertaken by the supervisory authority have not led to a positive change in the irregular practices established in the insurer’s activity.
With a view to protecting the interests of the insured persons and maintaining the insurance market’s stability, the FSC has imposed the only adequate measure - divestiture of the licence issued to Hildon AD Insurance Company to perform insurance activity.
In order to perform direct supervision over the insurer’s activities during the period prior to the appointment of a liquidator or an assignee in bankruptcy, the Financial Supervision Commission has appointed a quaestor.