The Private Insurance Supervisory Committee in Greece decided to block the assets of VDV Leben. The insurance company should cease the issuance of insurance policies and is not entitled to exercise any other operations related to existing contracts neither in Greece, nor abroad.
According to official information, VDV Leben is a small insurance company with a turnover of six million euros in 2009. It has approximately 11,000 insurance contracts signed and operates both in Greece and Germany. After the unfortunate group of 5 companies around Aspis Pronia and Commercial Value, VDV Leben is the seventh company on the Greek insurance market, which slammed shut in the past year and a half.
The insurance company was founded in 1992 and deals primarily with life insurance and long-term contracts for voluntary pension insurance. At first glance VDV Leben has been complying with capital adequacy requirements imposed in the sector through the years. The first doubts about its solvency appear when customers in Germany complained that they were not paid the benefits under the contracts. These complaints lead to a more serious inspection of the company’s documentation that shows VDV Leben lacks 40 million euros in the reserve, which were officially declared.
During the inspection of the Private Insurance Supervisory Committee in Greece VDV Leben management presented a certificate issued by Deutsche Bank, which certified that the German financial institution holds assets (stocks and bonds) of the insurance company. The inspection authorities, however, were surprised to find the certificate proved false. It became clear after the inspection that the forged document was presented to the Private Insurance Supervisory Committee and the Ministry of Economy and Development and the Ministry of Finance for three years in a row. The other option that has not been confirmed is that the inspection was prompted by a former employee of the company, who alarmed the supervising authorities for irregularities in the finances of VDV Leben.
It is expected the company’s assets to be blocked and its activities to be finally ceased. The case will be brought to the prosecution, which should launch an investigation of the criminal aspects of the case. According to Kathimerini newspaper, however, VDV Leben story is not over yet. It still operates in Germany through a brokerage company that continues to collect insurance premiums of about seven thousand customers. Analysts say the Private Insurance Supervisory Committee should require termination of the contract with the brokerage company thereby excluding the possibility to collect premiums for contracts that will never be paid.
VDV Leben will be reviewed under Article 6 of the Act for the operation of private insurance companies 400/70, which allows insurance companies in the red to make a second more favourable evaluation of their assets. According to Article 6, companies are entitled to add up to 30% of the tax valuation of the property owned, which will ensure coverage of the generated deficits. If even after increasing the assets valuation the insurance company still does not meet the requirements for solvency a supervisor should be appointed to determine the company's problems in detail.
GRReporter contacted the Association of Insurance Companies in Greece for comment, but they said their management board was at a meeting and there is not official statement on the matter yet because the case is still in progress.
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