Gefion Insurance has been declared bankrupt on 7th June 2021

Press Releases 
Press Release of 24 January 2020 on publication of restated information for the Annual Report 2018
Press Release of 9 October 2019 on subordinated loan with Fermat Capital Management

Financial Reports
Annual Report 2018
Annual Report 2018 Restated
HY 2018 Original Report
HY 2018 Restated Information
Annual Report 2017

Solvency and Financial Condition Reports (SFCR)
Group SFCR 2018 – Gefion Holding and Gefion Insurance
Group SFCR 2017- Gefion Holding and Gefion Insurance
Group SFCR 2016 – Gefion Holding and Gefion Insurance

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SUPERVISORY STEPS TAKEN BY THE DFSA TOWARDS GEFION INSURANCE A/S
The Danish Financial Supervisory Authority (“DFSA”) has decided not to grant Gefion Insurance A/S (“Gefion Insurance” or “the Company”) an extension of the recovery period which expired on 25 May 2020. Resultingly, the DFSA has also decided to withdraw the Company’s license as an insurance company.

Please find the DFSA’s full orders in Danish here (extension of recovery period) and here (withdrawal of insurance license). A statement from the DFSA on the orders can be found in English here.

Our comments to the DFSA’s decisions
The decision is surprising – not least due to the prevailing extraordinary circumstances and recognized effects to business of the global Corona virus pandemic – but also because we had obtained a commitment from our shareholders to support the Company with more capital if an extension was granted. An extended recovery period would have allowed on-going, but delayed investment processes to run their course and an orderly run-off to proceed with additional capital support from the shareholders if such investment processes ended without result.

In a comment to the decision by the DFSA, CEO Tonny Anker-Svendsen states:

“During the last twelve months, the management has worked hard and efficiently to strengthen the financial position of the company. We have successfully raised more than EUR 10 million in new capital during 2019 and were in progressed investment discussions when the COVID-19 pandemic set in with lock-downs effected across the globe, hampering the successful conclusion thereof.

We are disappointed that the DFSA was not prepared to grant us the necessary additional time to restore the situation to the benefit of all of our stakeholders in these times of great global turmoil. We are confident that we would have been able to raise the necessary funds to recover the capital position of the company and meet the requirements of the DFSA if more time had been granted. Unfortunately, our efforts proved insufficient to convince the DFSA. The task is now to liquidate the company as a solvent liquidation in an orderly manner in the interest of policyholders and all other involved parties.”

The Company is solvent and continues to have sufficient assets to meet its expected liabilities as they become due, but has as a consequence of the DFSA’s decisions and pursuant to the requirements of the Danish Financial Business Act decided to enter into solvent liquidation. A liquidator will be appointed shortly.

The Company will no longer write new business or renew existing insurance policies. It is important for us to underline that as the Company is entering a solvent liquidation operations will continue as usual in relation to business that has already been written on behalf of the Company and the policyholders’ coverage or ability to make a claim for any future losses under their insurance contracts will not be affected. Furthermore, all fees to our agents and claims handlers will be paid as they become due.

We have prepared a document with information to our policyholders which can be found here. If you are a policyholder of the Company and have questions in relation to the Company entering into liquidation, please read this document carefully before contacting Gefion Insurance or the agent/claims handler stated in your insurance policy as it may provide you with the answers you require.

We will reach out to our cooperation partners (agents, claims handlers, reinsurers etc.) separately with further information.

On a final note, we wish to thank all of our policyholders and cooperation partners for your business and support and will remain at your disposal during the liquidation of the Company.

Supervisory steps taken by the DFSA towards Gefion Insurance

The Danish Financial Supervisory Authority (“DFSA”) has decided not to approve Gefion Insurance A/S’ (“Gefion Insurance” or “the Company”) recovery plan and has as a result ordered the Company to stop writing business. The order will remain in force until the DFSA can approve a new recovery plan or the Company complies with its Solvency Capital Requirement.

The DFSA has also ordered Gefion Insurance to write off certain receivables from three of the Company’s agents. For one of the agents, the Company can avoid any write offs, if the Company can provide documentation to the DFSA that this agent is not in financial difficulties.

Please find the DFSA’s full orders in Danish here (approval of recovery plan), here (cease to write business) and here (recognition of impairment losses). A statement from the DFSA on the orders can be found in English here.

Our comments to the DFSA’s decisions

Gefion Insurance does not agree with the DFSA’s assessment that the recovery plan submitted by the Company does not provide sufficient evidence that the Company will be able to fulfil its Solvency Capital Requirement within the six-month recovery period.

Gefion Insurance has continued its capital raising efforts since the submission of the recovery plan in January with a view to restore the business to a level that will allow us to continue writing business in the short term. We are currently in on-going and progressed discussions with potential capital providers in order to secure sufficient own funds to meet the Company’s Solvency Capital Requirement and reestablish the solvency ratio to above 100 before the expiry of the recovery period.

Gefion Insurance also strongly disagrees with the order to cease writing new business and we have for the same reason appealed the decision to the Danish Business Appeals Board and requested that the appeal is granted suspensory effects. The Danish Business Appeals Board has already suspended a previous order from the DFSA, and we hope to obtain a similar outcome in this matter. In the meantime, however, we are required to comply with the order.

It is important for us to underline that the order does not impact business that has already been written on behalf of Gefion Insurance and operations will continue as usual in relation to such business.

In our opinion, an order to cease writing any new business is not a proportional measure which is suitable to protect the interests of our policyholders. The business of Gefion Insurance has already been limited following recent decisions from the DFSA and there has been no deterioration in the Company’s financial position, which can justify the order. In fact, the Company expects an improvement in the underlying business in the coming period as a result of the termination of loss-making agents and other factors. The Company still complies with its Minimum Capital Requirement and has so far complied with all other orders that have been issued by the DFSA.

Finally, it is noted that Gefion Insurance has already fully written down the existing receivables towards two of the three agents mentioned by the DFSA and the Company does not expect any further adverse developments as a result hereof. The agent receivables were written down as soon as the Company was made aware of the adverse financial developments for these two agents.

With regards to the third agent, the Company is genuinely surprised that the DFSA has taken the view that receivables should be written down as there are no indications of the agent being in a financially distressed situation and the agent continues to comply with the relevant solvency requirements of the home regulator. In our opinion, the matter has not been fully investigated by the DFSA and we expect that the DFSA will change this part of the decision as soon as more information is provided.

Order on limitation of business

The Danish Financial Supervisory Authority (“DFSA”) has ordered Gefion Insurance A/S (“Gefion Insurance” or “the Company”) not to expand the scope of our current operations.

The order will remain in force until Gefion Insurance has sufficient own funds to meet its Solvency Capital Requirement and until the Company has complied in full with the DFSA’s liquidity order of 11 December 2019.

Please find the DFSA’s full order here (only in Danish). A statement from the DFSA on the order can be found in English here.

Our comments to the DFSA’s order

From the outset, it is important to underline that Gefion Insurance is allowed to continue to write motor insurance business as well as other lines of business already being written in all countries where the Company is currently operating. In practice, the order will not have any effect on Gefion Insurance’s current operations.

The order is a result of Gefion Insurance’s solvency ratio being below 100 and a follow up on the liquidity order of 11 December 2019.

Gefion Insurance has been working on several solutions that in the short-term will improve the liquidity position of the Company. These efforts have resulted in the Company complying with the DFSA’s liquidity order of 11 December 2019 as per 31 December 2019. The Company expects to be able to ensure compliance with the liquidity order during the applicable period, which runs until the end of February.

Gefion Insurance is also in on-going and progressed discussions with potential capital providers in order to secure sufficient own funds to meet the Company’s Solvency Capital Requirement and reestablish the solvency ratio to above 100.

Order on the annual report for 2018

The Danish Financial Supervisory Authority (“DFSA”) has ordered Gefion Insurance A/S (“Gefion Insurance” or “the Company”) to publish supplementary/corrective information for the Company’s annual report for 2018. According to the DFSA, Gefion Insurance cannot recognize the value of a reinsurance contract.

Please find the DFSA’s statement on the decision here (only in Danish).

Our comments to the DFSA’s order

The DFSA has made its decision more than seven months after Gefion Insurance presented its final annual report for 2018. The Company does not agree with the decision, which in the Company’s opinion is based on an incorrect assessment of the facts surrounding the conclusion of the reinsurance contract in question.

Gefion Insurance has followed current practices for the recognition of the reinsurance contract in the audited annual report for 2018.

As the decision does not have any direct consequences for Gefion Insurance’s policyholders or cooperation partners, the Company will now prepare and publish the supplementary/corrective information in accordance with the decision.

Order on ensuring liquid assets

The Danish Financial Supervisory Authority (“DFSA”) has ordered Gefion Insurance A/S (“Gefion Insurance”) to ensure liquid assets of at least EUR 5m by the end of December 2019 towards the end of February 2020.

Please find the DFSA’s full order here (only in Danish). A statement from the DFSA on the order can be found in English here.

Our comments to the DFSA’s order

Update: On 5 March 2020, the DFSA confirmed that Gefion Insurance has complied with the order.

Following the closure of the ordinary inspection, Gefion Insurance has seen a significant decline in premium volumes. The decline in premium volumes are due to the cancellation of poor performing agents, but also the substantial fall in volumes on continued business. The decline has been more significant than expected and in addition, non-aligned credit terms offered to reinsurers and agents have further negatively impacted the liquidity position.

Gefion Insurance has been in on-going and open discussions with the DFSA on our current liquidity position. Gefion Insurance is working on several solutions that in the short-term will improve the liquidity position of the Company. These solutions are expected to be implemented over the course of the next two to three weeks. At the same time, discussions with potential capital providers are on-going and are expected to be finalised in the beginning of 2020.

Gefion Insurance expects the situation to normalize, and the Company projects significant improvements resulting from the termination of loss-making portfolios as well as from improved underwriting and claims handling initiatives. Not least, we expect to see improvements from reduced credit terms. The impact of these solutions is expected to offset the decline in premium volumes.

The DFSA has ordered Gefion Insurance to ensure that the Company has a liquidity buffer of EUR 5 million by year end, which is in line with our own projections. With the above initiatives and solutions, the Company is of the view that this can be achieved.

Statement of the DFSA’s conclusions of the inspection of Gefion Insurance

Following the completion of the ordinary inspection, the Danish Financial Supervisory Authority (DFSA) has decided to issue a number of orders and reprimands regarding Gefion Insurance A/S’ (“Gefion Insurance”) governance structure – primarily in relation to our oversight and control with agents and TPA’s, but also in respect of more technical issues.

On the basis of the number and the content of the governance orders and reprimands issued by the DFSA, the DFSA has decided to impose a temporary capital add-on on Gefion Insurance. The capital charge amounts to approximately DKK 39.2 million (EUR 5.2 million equivalent) and will remain in place until the governance issues have been fully solved. As a result of the capital add-on, Gefion Insurance’s Solvency Capital Requirement (SCR) will drop below 100, whereas the capital add-on will not affect our Minimum Capital Requirement (MCR).

Please find the DFSA’s statement on the inspection here. An English translation of the statement can be found here.

The DFSA’s full order on capital add-on can be found here (only in Danish). Furthermore, the DFSA’s full order on limitation of business volumes can be found here(only in Danish).

Our comments to the DFSA’s order

Gefion strongly disagrees with the decision to impose a capital add-on and will take steps to appeal the decision. The majority of the orders and reprimands regarding our governance structure have either already been addressed at this point in time or are in the process of being addressed.

In the short term, we are taking immediate steps to recapitalise Gefion Insurance and to re-establish an SCR above 100. This includes discussions with existing shareholders and other capital providers. Gefion Insurance notes that the existing shareholders have just recently demonstrated their commitment towards Gefion Insurance by injecting more than EUR 5 million into Gefion Insurance. In the more medium term, we are in discussions with a number of third-party investors to significantly increase our capital base before year-end.

Due to the fact that we will have an SCR below 100, the DFSA has also ordered that Gefion Insurance should not expand its business volumes (compared to 2018-levels) until a re-capitalisation has increased the SCR level to above 100. It is important to underline that the order does not prevent Gefion Insurance from continuing to trade with existing partners and underwrite insurance risks.

In conclusion, the very thorough ordinary inspection of Gefion Insurance, which was initiated by the DFSA back in November 2018, is now coming to an end. This also means that necessary actions can now be taken, so that Gefion Insurance will be able to continue to operate in close collaboration with our key stakeholders and partners.

Whilst we are disappointed with the decision taken by the DFSA, Gefion Insurance are determined to continue to operate as a successful company and valued insurer to our many customers and partners across the European insurance market. We look forward to being able to fully focus on developing the business for the remainder of 2019, where focus will be on consolidation and profitability in our existing programs.

Order of 21 June from the Danish FSA

The Danish Financial Supervisory Authority (“DFSA”) has ordered Gefion Insurance A/S (“Gefion Insurance”) to refrain from using the loss-absorbing capacity of the deferred tax in the calculation of the Solvency Capital Requirement.

Please find the DFSA’s statement on the order here. An English translation of the statement can be found here.

Our comments to the DFSA’s order
The order comes after a lengthy case handling process, which was initiated back in 2017.

The DFSA has taken the view that Gefion Insurance cannot use the loss-absorbing capacity of deferred tax when calculating the Solvency Capital Requirement. This is based on the assessment that Gefion Insurance will not be able to reestablish the company’s own funds quickly enough after an immediate occurrence of a hypothetical 200-year event where Gefion Insurance would lose its entire capital.

Gefion Insurance does not agree with the decision.

Gefion Insurance has argued that it will be possible for the company to raise sufficient capital, and the company will therefore be able to continue to do business even in a hypothetical 200-year event. In the period April 2018 to May 2019 alone, capital increases of EUR 12.3 million have been completed. Furthermore, Gefion Insurance is still in on-going discussions about further capital increases.

However, in the current situation, it has not been possible to convince the DFSA of this and Gefion Insurance has therefore chosen to take note of the order, even though Gefion Insurance is still of the opinion that it – in line with other insurance companies – has had no reason to change its practice due to a lack of common European guidelines in the area.

The DFSA has confirmed to Gefion Insurance that it is complying with the order.

Gefion Insurance is now looking forward to the DFSA’s up-coming conclusion of the very long and thorough ordinary inspection of Gefion Insurance, which the DFSA has carried out. An inspection that has taken place in a close and open collaboration between the parties.

Gefion Insurance looks forward to concluding on the process so that the necessary decisions can be made, and the company can focus on its continuing operations and consolidation together with our business partners and investors for the benefit of our more than 600,000 insurance customers.

Press release about Gefion Finans can be found here