Cyprus Mail

CNP Assurances loses Cyprialife case against BOC (updated)

By Stelios Orphanides

The London Court of International Arbitration ruled that Bank of Cyprus had no obligation to exclusively sell insurance products of CNP Cyprialife and CNP Asfalistiki, which it co-owns together with the French insurance giant CNP Assurances, the head of CNP Cyprus Insurance Holdings said.

Bank of Cyprus BOCThe arbitration court ruled that “Laiki’s current obligations, which were transferred to Bank of Cyprus, cannot exceed Laiki’s obligations in March 2013,” which were restricted to the branch network of Laiki, Takis Phidia, chief executive officer of the CNP Cyprus operations, said in a telephone interview on Wednesday, a day after the court issued its ruling. “For us it is a negative ruling as we were hoping to get compensation. We will continue with the implementation of our business plan”.

The court based its ruling on the grounds that Laiki, whose assets, including Cyprialife and Asfalistiki, Bank of Cyprus absorbed in March 2013, had no obligation to sell their products via Bank of Cyprus’s retail network, he continued.

In 2008, CNP Assurance, which sought a total of €240m in compensation from Bank of Cyprus, acquired a 50.1 per cent stake in the Laiki insurance business from Marfin Popular Bank, as Laiki was known at the time, for €145m. The CNP-Laiki deal included an exclusive distribution agreement of the CNP Cyprialife/Asfalistiki products at Laiki branches. If Laiki failed to do so, the two sides agreed that CNP Assurances would be entitled to sell back its stake at a price determined by an agreed formula. Bank of Cyprus, which operates in the insurance sector with its subsidiaries General Insurance and Eurolife, has a 49.9 per cent stake in CNP Cyprialife/Asfalistiki.

“The ruling does not have an impact on our operations, as we were getting no business from Bank of Cyprus,” Phidia said. “We will continue to compete with General Insurance and Eurolife, and the only outstanding problem that will remain open is that of the shareholding”.

Phidia said that he considers it unlikely to reach a compromise with Bank of Cyprus, as an attempt to do so before CNP resorted to arbitration proved fruitless.

He added that CNP’s units will continue to operate alone on the Cypriot insurance market. “Statistics show that we are number one in new business, well ahead of Bank of Cyprus, we are leaders in the non-life insurance market, slightly ahead of General Insurance, and therefore nothing changes,” he said. “We are doing well and sales this year are quite strong”.

Phidia said that CNP, which controls the board, so far denied to sanction the sale of Bank of Cyprus’s stake, but may change its position following the ruling.

cnp-logoAccording to CNP Assurances, the French company suffered a loss of less than €10m in the 2013 bail-in, which, in the case of deposits held by insurance companies, was limited to 27.5 per cent of uninsured deposits compared to a 47.5 per cent haircut of other depositors.

In a statement issued on Wednesday afternoon, CNP Cyprus Insurance Holdings said that while the ruling was not to the group’s satisfaction, it will not affect its growth, which is based on its workers, associates and the “enduring loyalty of its customers”.

“A very important strength of CNP Cyprus group is its main shareholder, the French multinational company CNP Assurances, which is amongst the ten largest insurance groups in Europe ranked by turnover, capital adequacy and solvency margin,” CNP Cyprus said, adding that the mother company has a history of 160 years and is present also in Latin America and Asia and counts over 36m policyholders generating last year a turnover of €31,6bn.

In Cyprus, CNP “offers its customers the reliability and credibility stemming from an International insurance power who has invested in Cyprus and trusts the experience, technical excellence and expertise of the human capital” of its units on the island, it said.

Related posts

Coronavirus: Investigation into virus chains in schools

Evie Andreou

Coronavirus: Health minister seeking to increase  jab coverage among nurses

Evie Andreou

Coronavirus: Thursday’s free testing sites for eligible groups

Staff Reporter

MPs ponder electronic bracelets to alleviate prison overcrowding

Jean Christou

UN Cyprus envoy appointment was not part of British meeting

Staff Reporter

Thousands of bullets and hunting cartridges stolen in Limassol

Staff Reporter