Cyprus Mail

Olympic Insurance was already insolvent by 2015, accounts show

By Stelios Orphanides

The supervisor of Olympic Insurance allowed the company, which had its licence revoked in May, to operate for years even though it was bankrupt by 2015, a new document suggests.

In 2015, when Olympic generated a loss of €12m, its equity fell to minus €5.7m, the company’s accounts for the financial year 2016 prepared by KPMG show. In 2016 it generated a loss of €13.8m.

Again in 2016, i.e. the year in which Diego Gonzalez Alfonso’s Hispakol S.A. acquired Olympic and the European directive Solvency II came into force which prescribed a minimum solvency capital requirement for Olympic of €30.7m, its equity rose to €31.5m. In the same year, Olympic’s insurance liabilities soared to €47.1m from €34.6m in 2015 while its turnover rose to €21m from €18.4m.

Yet, the company’s new owners increased the remuneration of its directors and management to €203,831 in 2016 from €94,939 the year before.

The revocation of the company’s licence in May and the initiation of its winding-up process last week have sent shockwaves across Bulgaria in which Olympic had a 9 per cent share in the third-party insurance market.

On Thursday, it emerged that the company’s owner Gonzalez Alonso, had a questionable reputation in his home country Spain. The Spanish financial markets supervisor Comision Nacional del Mercado de Valores (CNMV) warned in June 2015 that a company affiliated with the investor’s New York Securities Bank (NYSB) Fund Management S.L. had no licence to provide regulated investment services.

In January and February 2016, Hispakol issued two bonds, one worth €10m and the other €12.8m, backed by shares of Prisma 2014 SOCIMI, a related company, and land in the Dominican Republic respectively to recapitalise Olympic. In July 2016, Hispakol issued a €20m bond, backed with Brazilian government bonds, “in repayment of the share capital on June 1, 2016”.

In January 2017, Olympic agreed with Hispakol to exchange the bonds with their collateral, a step that had not been completed by the time the accounts were prepared. Four months later, the company’s board decided not to complete the transfer citing “technical reasons” including inability to split the Brazilian government bond.

The Brazilian bond and the Dominical Republic immovable properties were among the assets Baker Tilly, the accounting firm tasked with auditing the 2017 accounts, declined to express an opinion.

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