2013-03-07
With ERGO having established ERGO Insurance SE, the Bank of Lithuania terminated the no longer necessary license of ADB ERGO Lietuva; The insurance activities license of UADB Industrijos garantas has been suspended.
With ERGO having established ERGO Insurance SE, the Bank of Lithuania terminated the no longer necessary license of ADB ERGO Lietuva.
The joint stock insurance company ERGO Lietuva, as well as its companies operating in Latvia and Estonia, have joined the new European company ERGO Insurance SE; therefore, the Board of the Bank of Lithuania terminated the insurance activities license of ADB ERGO Lietuva. The new company ERGO Insurance SE will operate with a license issued by Estonia’s supervisory institution.
Termination of the license of ADB ERGO Lietuva is a standard procedure, which is applied when several companies join into one. ERGO will continue its operations in Lithuania as it did before, only now it will have a different legal status.
ADB ERGO Lietuva has confirmed that during the reorganization it did not receive from creditors any demands, objections, declarations or requests related to the reorganization. All the assets, rights and liabilities of this company were transferred to ERGO Insurance SE, which began operation at the start of this year and has a branch in Lithuania.
The insurance activities license for ADB ERGO Lietuva was issued by the Republic of Lithuania’s Insurance Supervisory Commission in the 15 March 2005 resolution.
The insurance activities license of UADB Industrijos garantas has been suspended.
The Board of the Bank of Lithuania terminated the insurance activities license of the closed joint stock insurance company Industrijos garantas. This license was issued to the company under the Republic of Lithuania’s Insurance Supervisory Commission’s resolution of 15 March 2005.
“Such a decision was taken considering that, by decision of the Board of Industrijos garantas, the goal of this company is a smooth finalization of their insurance activities, performing a voluntary liquidation procedure of the insurance company. This is a civilized, respectable way to leave the insurance business,” comments Mindaugas Šalčius, Deputy Director of the Prudential Supervision Department of the Supervision Service.
The Board of Industrijos garantas in 2011 had made the decision to no longer enter into new insurance agreements and meet only the liabilities from earlier agreements: administer insured events and meet other obligations according to the effective insurance agreements. Most of the old insurance agreements are no longer valid: on 1 February 2013 only 33 security insurance agreements, made by UADB Industrijos garantas, were still effective.
In taking the decision to suspend the insurance activities license, the Board of the Bank of Lithuania took into account that UADB Industrijos garantas no longer performs active insurance activities (doesn’t enter into new insurance agreements and doesn’t receive the main activity funds of the insurance company), it has become difficult for the company to maintain the capital adequacy requirements (minimal guarantee fund), which are applied to actively operating insurance companies.
M. Šalčius notes that the suspension of the license does not create obstacles for negotiations regarding the possible transfer of the rights and obligations of Industrijos garantas. And if the insurance company’s shareholders decide to continue insurance operations, if documents that prove compliance with established requirements are provided, it would be possible to discuss the issue of renewing the operating license.
Despite the suspension of the insurance activities license, this company will continue to administer the earlier agreements, it will pay out insurance benefits, perform all other activities characteristic of an insurance company, except for entering into new agreements.