BaFin, Germany’s top financial services regulator said it has filed a petition to open insolvency proceedings for the assets of East-West Assekuranz AG at the Local Court (Amtsgericht) of Charlottenburg (Berlin).
BaFin said in a statement that East-West Assekuranz AG’s management board finally notified BaFin of the insurer’s overindebtedness on 14 June 2017, after fair value accounts produced on the basis of the suspension of new business showed that the undertaking’s liabilities were greater than its assets. As East-West Assekuranz AG has had its authorisation to carry on business withdrawn, no other specific recovery options are apparent. The insurer’s website has been taken down.
If the insolvency court decides to open insolvency proceedings, section 16 (1) of the Insurance Contract Act (Versicherungsvertragsgesetz) lays down that insurance relationships must end within one month after the opening of insolvency proceedings. In the course of insolvency proceedings, the guarantee assets are used for the preferential satisfaction of the claims of the insured, policyholders, beneficiaries or injured third parties (section 315 (1) sentence 1 of the VAG).
The insolvency court will then appoint an insolvency administrator, who is responsible for the winding-up of the business, and a guardian, who protects the rights of the insured laid down in section 315 of the VAG. The court will also arrange for information to be provided to creditors pursuant to section 313 of the VAG.