Netherlands-based International Insurance Consortium (IIC), a company focusing on insurance companies in Eastern and Southeast Europe, announced it has reached an agreement with the owners of Romania’s Carpatica Asig to take over 100% of troubled Romanian insurer Carpatica Asig, hotnews.ro reported on March 17 quoting an IIC press release.

The buyer recently took over 90% of a Ukrainian insurer, but there is scarce information about other activities of the group.

The deal needs the approval of the local financial market regulator ASF, which the buyer hopes to get by the middle of this year. ASF told hotnews.ro that it had not received the documents yet and explained that the final decision on the approval will depend on the investors' plan for meeting Solvency II, capital adequacy and solvency benchmarks, and on its plan for the operations over the next three years. The investors' plans will be evaluated in the context of the 2015 financial results, to be audited by Deloitte, and based on the insurer's evaluation carried in 2015, ASF added.

"I would like to emphasize that IIC intends to adequately capitalize the company, after receiving all the necessary approvals. At the same time IIC will invest in the future of the company," IIC managing director Jacob Westerlaken said in the press release.

The value of the deal is estimated at around €85mn-€95mn including a €75mn capital increase and €10mn-€20mn paid to the owners, according to unofficial sources quoted by marsanu.ro. But the capital increase might have to be larger, depending on the final findings of ASF.

Carpatica Asig is currently undergoing a financial recovery procedure and has to attract a strategic investor. In January, ASF decided to appoint the Insurance Guarantee Fund (FGA) as temporary administrator of the insurer. Earlier this month, ASF decided that the Insurance Guarantee Fund should temporary take over its management.

That followed searches carried out by the Romanian Directorate for Investigating Organised Crime and Terrorism (DIICOT) at the offices of the insurer in Bucharest and Sibiu as part of an embezzlement and money laundering investigation. Romanian businessmen Ilie Carabulea, the majority shareholder of Carpatica Asig, who indirectly owns some 94% of the shares, was later in the month sentenced to six and a half years in prison for bribing ASF employees.

The Romanian insurer announced at the end of last year that it had signed a memorandum of understanding with a potential investor and it confirmed on January 11 that the due diligence process for the valuation of the firm had started.